We determine the total amount of money required from rates in order to provide the services and infrastructure that the Yarra community needs.
A step by step guide to how rates are calculated
For example if our revenue was $100,000,000* we would calculate rates following the steps below:
Step 1: We divided this amount by the total combined value of all rateable properties in Yarra to find the rate in the dollar. For this example we are using a rate in the dollar figure of 0.035309992.
Step 2: The current Capital Improved Value** of each residential property is multiplied by 5% in accordance with state legislation. This produced the Net Annual Value of each residential property. (Commercial and industrial properties are rated similarly but include an additional component.)
Step 3: We multiplied the Net Annual Value of your property by the rate in the dollar to produce the amount you are required to pay in rates.
See our worked example for property A:
- Capital Improved Value = $800,000
- $800,000 x 5% = $40,000 (Net Annual Value)
- $40,000 x 0.035309992 (Rate in the Dollar) = a base rates bill of $1,412.40
*This figure would not include rates income from recently constructed and valued properties, interest and other charges.
**Capital Improved Value (CIV) is the total market value of the land plus buildings and any other improvements.
Fire Services Levy
Your rates notice also includes a separate Fire Services Levy, which we are obliged to collect on behalf of the State Government.
What is rate capping?
The State Government has capped rate increases at 2.25% for 2018/2019 and we have elected to apply this 2.25% increase rather than seek an exemption from the cap.
It is important to remember that the 2.25% cap does not apply to your individual bill but rather to the total amount of money that we are seeking from rates revenue. Most properties will experience rate increases that are slightly higher or lower than 2.25%.
The MAV has produced this short video explaining rate-capping in simple terms.
How does revaluation affects your rates?
As required by the State Government, Council has revalued all Yarra properties in 2018. We found that properties had increased in value by an average of 18.48% since 2016.
This means that if your property’s value grew by more than 18.48% you will experience an increase to your rates higher than the 2.25%. Properties that grew in value by less than 18.48% (or decreased in value) will experience an increase lower than 2.25%.
Revaluation of your property does not increase the total amount of rate revenue collected by us. Rather it determines the proportion of rates you need to pay relative to other property owners. The 2.25% rate cap applies to the overall amount of money that Council is receiving from rates.