Rates setting without complying to ATO ruling

Taxation ruling ATO ID 2012/87 defines a general rate (as a tax) as “a compulsory extraction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered”. This distinction makes “rates as taxes” and “rates as fees for service”, mutually exclusive.  Thus, in setting rates, Municipal Councils must be cognisant of the nature of the economic goods that are to be supplied. A range of different rates, licence fees and charges are able to be levied, all with their individual requirements on those who should pay the fee for the delivered services. Public goods, which are paid for from the Consolidated Fund, need separate identification. Hence, taxes raised to support the payment for public goods, are identifiable by being raised in the same manner as the Fire Services Levy.

A good governance watch Bayside ratepayer found that this ATO did not apply in his Council’s financial management and rates setting. Read about the discovery in the two reports:

  1. COUNCIL RATES PAPER
  2. The Comprehensive Income Statement.