How Rates and Charges Work

Each council set rates for their municipality through their budget. They must engage with their communities on their decisions relating to budgets, rates and other charges.

Determining how much each property pays involves determining the total amount of rate revenue required and dividing this across the total value of all properties in the municipality to establish a rate in the dollar. The rate in the dollar is then applied to each individual property’s value to calculate its rates. Detailed information on the legislation and how it works may be found in Guidance and Resources below.

If you have any specific questions regarding your individual rates, please ensure you contact your council directly.

Recent Reviews, Reforms and Resources

The Local Government Legislative Amendment (Rating and Other Matters) Act 2022 received Royal Assent on 9 August 2022.  The Act implements the first stage of rating system reforms and benefits over three million ratepayers by:

  • Prescribing more flexible payment plans as a means for councils to recover unpaid rates and charges in addition to the four instalments for payment currently mandated
  • Introducing the Minister for Local Government to set the capped interest rates for unpaid rates and charges
  • Empowering the Minister for Local Government to issue Ministerial Guidelines for greater consistency in financial hardship policies across councils
  • Expanding the criteria for councils to provide rate rebates and concessions for properties that provide a public benefit
  • Repealing redundant service rates and charges powers
  • Amending the power for councils to declare a service rate or charge to ensure that charges relate to waste management and essential services, and
  • Ensuring the timely levying of council special rates and charges, to minimise delays between declaring special rates and charges schemes and the billing of ratepayers.

https://www.legislation.vic.gov.au/as-made/acts/local-government-legislation-amendment-rating-and-other-matters-act-2022

  • Fact Sheet - Local Government Legislative Amendment (Rating and Other Matters Act 2022) PDF, 152.57 KB
  • Fact Sheet - Local Government Legislative Amendment (Rating and Other Matters Act 2022) DOCX, 873.73 KB
  • Fact Sheet Other Matters - Local Government Legislative Amendment (Rating and Other Matters Act 2022) PDF, 189.66 KB
  • In 2015, a cap on rates was introduced to limit annual increases in rate revenue.

    Each year the Minister for Local Government sets the rate cap amount based on the forecast Consumer Price Index (CPI) and advice from the Essential Services Commission (ESC).  For the 2023-24 financial year, the Minister has set the rate cap at 3.50 per cent.

    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.

    Only the general rate and municipal charges part of a rates bill are subject to the cap. Other parts, such as waste charges and other user fees and levies, remain uncapped.

    Councils can apply to the ESC for a higher cap if they can demonstrate community support and a critical need for spending on services or projects that require a rate rise above the capped amount.

    For more information on the rate cap mechanism visit the ESC here.

    The Rate Cap Mechanism was reviewed in 2021 as required under section 185G of the Local Government Act 1989.

    The review considered:

    • whether the mechanism for setting a cap on rates set out in Part 8A of the Act is still appropriate; and
    • whether Part 8A of the Act is effective or needs to be amended.

    The review report and the Government's response to the final report were tabled in the Victorian Parliament in December 2022.

  • Local Government Rate Capping Mechanism Review Final Report PDF, 3363.41 KB
  • Victorian Government Response to the Final Report PDF, 179.79 KB