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 City community needs.

A step by step guide to how rates are calculated

For example if our revenue was $100,621,000* and if the rate increase was 2% which is in accordance with the State Government’s cap we would calculate rates follow the steps below:

Step 1: We divided this amount by the total combined value of all rateable properties in Yarra. This produced a rate in the dollar figure of 0.04091118.

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 0.04091118 (Rate in the Dollar) = a base rates bill of $1,636.45

*This figure would not include rates income from recently constructed and valued properties, interest and other charges. In this example, additional income could bring our total rates revenue to $101,964,000.

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% for 2017/18 and we have elected to apply this 2% increase rather than seek an exemption from the cap.

It is important to remember that the 2% 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%.

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

How revaluation affects your rates (for 2016/2017 Rating Year)

All properties in Yarra are revalued every 2 years, which was last done for the 2016/2017 financial year. We found that properties had increased in value by an average of 16.93% since 2014.

If your property’s value grew by more than 16.93% this will have resulted in a higher than average increase in your rates bill.

If your property’s value grew by less than 16.93% (or decreased) this will have resulted in a lower than average increase (or even a decrease) in your rates bill.

For example Property B:

  • Old value = $750,000
  • New value = $1,000,000
  • Value increase = 33.3%
  • Old rate amount $1,733.25
  • New rate amount $2,005.45
  • Rates have increased by 15.7%

For example Property C:

  • Old value = $950,000
  • New value = $1,000,000
  • Value increase = 5.3%
  • Old rate amount $2,195.45
  • New rate amount $2,005.45
  • Rates have decreased by 8.7%

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.