Impacts of reforms to date stage 1 Revenue neutralityChanges in residential general rates to date for houses & unitsImpact of tax reform on householdsImpact of tax reform on businessStage 2 reforms 2017-18 - 2021-22 Commercial conveyance duties removed for most transactions from 2018-19 Residential Conveyance duties continue to reduce every year General rates increases moderated & more equitable
General rates increases moderated & more equitable
Unlike in other jurisdictions in Australia, rates revenue in the ACT pays for more than just municipal services – it helps to fund a broad range of services for Canberrans, including:
- Housing and community services;
- Roads and public transport; and
- Police and emergency services.
The tax reform program will ensure that we have an adequate and ongoing revenue source into the future to ensure Canberra remains the world’s most liveable city.
To rebalance the general rates system, a change in methodology for calculating general rates paid by units will make payments more equitable between units and houses.
Houses typically have relatively higher AUVs than units – despite often having similar market values. Table 10 below shows the difference in rates paid by a house in Charnwood and a unit in the City with the same market values.
From 1 July 2017, the Government will change the general rates calculation for multi-unit dwellings to base it on the total AUV of the land rather than the individual AUV of the unit (consistent with changes to Land Tax). This will make the increase in general rates for units higher than houses in 2017-18 and 2018-19 as the transition takes effect.
Table 10 2015-16 Comparison of general rates liability
|Suburb||Property type||AUV||General rates||Market value|
For houses, the annual increases for the next five years of Stage Two tax reform will be 7 per cent on average. For units only, the change in the rates methodology will also add about $150 on average in 2017-18, and $115 on average in 2018-19. The increases will then revert to an average of 7 per cent from 2019-20 to 2021-22.
Overall, general rates for commercial properties will increase by an average of 6 per cent in each year from 2017-18 to 2021-22. This will provide certainty to the sector.
The actual increase for a particular property will depend on that property’s AUV.
Efficient and stable revenue base
By 2019-20, conveyance duty revenue is estimated to decline to about 14 per cent of total tax revenue, a decrease from 20 per cent in 2011-12, and general rates is estimated to increase to about 29 per cent of tax revenue. The transition to an efficient broad based land tax secures a stable revenue base into the future which will allow the Government to plan for the future with greater certainty for spending on services and infrastructure.
The Government offers a range of concessions to eligible households to assist with cost of living pressures.
A Pensioner Rates Rebate of up to $700 is available for pensioners in 2016-17. Pensioners in receipt of the rebate prior to 1997 will remain eligible for a 50 per cent rebate on their rates, capped at 2015-16 levels for amounts above $700.
The Rates Deferral Scheme allows eligible households to defer indefinitely all or part of the balance of their total rates charges after the rebate has been deducted. A low rate of simple interest is charged on deferred amounts.
The Pensioner Duty Concession Scheme and the Over 60s Home Bonus Scheme assist eligible pensioners and over 60s to move to accommodation more suited to their needs – for example, moving from a house to a townhouse – by charging conveyance duty at a concessional rate.
The Government also offers a range of other concessions to assist with cost of living. These include rebates on electricity and gas, rebates on water and sewage, discounts on motor vehicle licence and registration costs and discounts on public transport fares. Further details can be found by contacting Access Canberra on 13 22 81 or on the website: www.assistance.act.gov.au.