When Council is preparing its budget for the new financial year, it considers how much revenue will be generated from rates and charges.

Council is limited to a maximum percentage increase that can be raised from certain rates and charges. This restriction is called rate pegging and it is set by the NSW Minister for Local Government each year.

Council uses a combination of a base amount and an ordinary rate. The ordinary or general land rate is calculated using an Ad Valorem Rate which is applied to the current value of the land.  The base amount and the Ad Valorem Rate vary depending on the relevant categorization of your land.

The use of a base amount brings the higher and lower values closer together and in effect spreads the rate burden 'across the board' to all ratepayers.  The base amount varies across rate category types but not within categories.

The Ad Valorem Rate is the percentage amount per dollar applied to the value of the land.  The Ad Valorem Rate is calculated by taking into account total anticipated rates revenue and the average percentage increase in land values in the area. The Ad Valorem Rate also varies with the different land category types.

Rates calculator

Individual land value x Ad Valorem Rate + Base Rate =  Total general rates charge ($)

For example 

Mr Jones owns land in the residential category which has been valued at $150,000
The base amount for a residential property is $129.00
The Ad Valorem Rate for a residential property is 0.00266714.

· $150,000 x 0.00266714 = $400.08 + Base Rate of $129.00

· Therefore Mr Jones’ ordinary or general rates charge for the year is $529.08

A landowner, whose land has increased in value, but where the percentage increase is less that the average percentage increase for the area, is likely to see a reduction in their Ad Valorem Rate component.

A landowner, whose land has increased in value such that the percentage increase is consistent with the average percentage increase, is likely to see little change in the Ad Valorem Rate component of their ordinary rates.

A landowner, whose percentage land value increase has exceeded the average percentage increase for land values may experience an increase in the Ad Valorem Rate component of their ordinary rate.

In addition to the ordinary or general rates your notice may include water and sewerage rates and garbage service and management charges.