How rates are calculated

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 0.039952436.

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 0.039952436 (Rate in the Dollar) = a base rates bill of $1,598.10

*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 2.5% for 2019/2020 and we have elected to apply this 2.5% increase rather than seek an exemption from the cap.

It is important to remember that the 2.5% 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 2.5%.

The MAV has produced this short video explaining rate-capping in simple terms.

How does revaluation affect your rates?

As required by the State Government, the Valuer-General has revalued all Yarra properties in 2019. It was found that properties had decreased in value by an average of 9.41% between 1 January 2018 and 1 January 2019.

Council’s increase in total rate income has been capped at 2.5%. This means that if your value has fallen by 9.41% you will receive a 2.5% rate increase. If your value decreases by more than 9.41% your rates will go down. If your value decreases by less than 9.41% or increases your rates will go up.

 The relationship between increases and decreases in valuations to rate movements is called, “The Rate Re-Distribution Effect”. The following examples outline the rate re-distribution effect:

Property A – Value decreased by 9.41%
Property B – Value decreased by 15.00%
Property C – Value decreased by 5.00%
Property D – Value increased by 5.00%
2018-2019 Rate in Dollar (last year) = 0.035309992 – Net Annual Value is multiplied by this rate.
2019-2020 Rate in Dollar (this year) = 0.039952436 – Net Annual Value is multiplied by this rate.

   Property A  Property B  Property C Property D 
 Old value (01/01/2018) (CIV)  $900,000 $900,000  $900,000  $900,000 
 Old Net Annual Value (NAV)  $45,000 $45,000 $45,000 $45,000
 Percentage change  - 9.41% - 15.00%  - 5.00%  + 5.00% 
 New value (01/01/2019) (CIV)  $815,310 $765,000 $855,000  $945,000
 New Net Annual Value (NAV)  $40,756 $38,250  $42,750  $47,250 
 Old rates  $1,588.95 $1,588.95  $1,588.95  $1,588.95 
 New rates  $1,628.66 $1,528.18  $1,707.96  $1,887.75 
 Rate increase/decrease  + 2.50% - 3.82%   + 7.49%  + 18.80%