Rates FAQ

1. What are Council rates?

Council rates are a property tax paid by property owners within a municipality (Council area). They help fund over 100 services provided by Councils, including maintaining local roads, Council facilities, and public open spaces like parks and gardens.

2. How are Council rates calculated?

Council rates in Victoria can comprise up to three components: a municipal charge (not more than 20 per cent of a council’s total rates revenue), a waste management (garbage) charge, and a rate based on property values. Your property might also have a charge for the Victorian Government’s Fire Services Property Levy.

3. Does an increase in property value cause a rate rise?

Not necessarily. The property value is used to work out the amount of rates paid by individual properties. This means that some ratepayers will pay more and some will pay less, depending on the new value of their property relative to other properties in their Council area. A higher valued property within a Council area generally contributes more in rates, so that property rates reflect the value of the property rather than the level of services received. Property revaluations are conducted to maintain a fair distribution of rates between property owners. They ensure that property owners pay a fair and equitable share of rates based on the current value of their property.

4. What rights do ratepayers have regarding property valuations?

You can object to your property’s valuation under the Valuation of Land Act 1960. You must do this within two months of getting your rates notice.

5. How often are property valuations updated?

Property valuations are updated every year to make sure everyone pays a fair share. Only qualified independent valuers can do these valuations. Supplementary valuations may be undertaken during the year in certain circumstances (most commonly when there is a change to the physical characteristics of the property or to the use of the property).

6. What is the annual rate process?

Each year, the Council decides how much money it needs from rates by looking at community needs and its income. They divide the total amount needed by the total value of all properties to get the 'rate in the dollar' amount. This rate in the dollar is then applied to each property’s updated value to determine the rates to be charged.

7. How do councils set their budgets?

Councils set their budgets by deciding on priorities and allocating funds to meet their goals. This includes maintaining and upgrading assets and providing community services. This process is done each year, and the community has input on this process to ensure priorities set by the Council align with those of the community.

8. How do differential rates work?

Differential rates are used to determine a fair contribution from each type of property, such as residential, commercial, industrial, and farm properties. Councils use property values as the basis for calculating how much each property pays in rates. The rate in the dollar is multiplied by the value of a property to establish the amount to be paid for each property.

9. What is a municipal charge?

This is a fixed amount levied on all rateable properties to cover some of the administrative or fixed running costs of the Council. The municipal charge ensures that all properties, regardless of their size or valuation, contribute a base, equal amount towards the operation of the Council.

10. How does rate capping affect Council rates?

Rate capping restricts the amount that councils can raise their rates each year. The rate cap is set by the Minister for Local Government and is based on the Consumer Price Index (CPI) and advice from the Essential Services Commission (ESC). The rate cap applies to the Council’s total rate revenue only - not individual properties. Individual rates bills may increase or decrease by more (or less) than the capped rise amount due to their valuation movements. See below video for more information.