In Australia, council rates are a standard expense for property owners, covering essential services such as waste management, public infrastructure, and local community facilities.
A common question many property owners ask is: “Does council rate have GST?” The short answer is no—council rates are generally GST-free because they are considered a tax rather than a commercial service.
However, there are exceptions. While the base council rates remain GST-exempt, certain additional charges or services provided by local councils may attract GST.
Understanding how GST applies (or doesn’t apply) to council rates and related fees is crucial, especially during property settlements or when managing investment properties.
In this article, we’ll break down the key points surrounding GST and council rates, clarify common misconceptions, and provide insights on how these charges are handled during property transactions.
Whether you’re a homeowner, property investor, or preparing to buy or sell a property, this guide will help you confidently interpret your council rates notice and identify when GST might come into play.
Are Council Rates Subject to GST in Australia?
In Australia, council rates are generally not subject to GST. Council rates are considered a form of tax charged by local government authorities to cover essential services like waste management, public facilities, and local infrastructure maintenance.
Under the Australian Taxation Office (ATO) rules, taxes and statutory fees imposed by government bodies, including council rates, are not treated as taxable supplies. This means GST is not added to the base amount of your council rates.
When you receive your council rates notice, you’ll typically notice there’s no GST line item. Instead, the amount payable is a flat fee determined by your local council, based on your property’s value and location.
However, while council rates themselves are GST-free, certain other council-related fees and services might include GST.
Why Aren’t Council Rates Typically Charged With GST?
The reason council rates aren’t typically charged with GST comes down to their classification as a tax rather than a commercial service.
GST (Goods and Services Tax) is applied to goods and services provided in exchange for payment. However, council rates are not considered a ‘service’ but rather a compulsory tax imposed by the local government.
In Australia, taxes, fees, and charges imposed by government entities under legislation (like council rates) are exempt from GST unless they are specifically listed as taxable under the ATO’s rules.
Essentially, your local council isn’t selling you a product or service when they charge you rates—they are collecting funds to maintain public services and infrastructure. This clear distinction keeps council rates outside the GST system.
Also Read: What is GST on Property Sale in Australia?
When Could GST Apply to Council Rates or Related Charges?
While council rates themselves are GST-free, some additional council services or charges might attract GST.
Common Examples of Council Charges That Include GST:
Waste Collection Services Beyond Standard Rates: If you request extra bins or additional waste collection services, these might incur GST.
Facility Hire Fees: Renting a council-owned venue, such as a community hall or park pavilion, usually includes GST.
Commercial Property Services: Council-provided services related to commercial or business activities may have GST applied.
Fines and Penalties: While most fines don’t include GST, some administrative fees for processing fines may.
When you receive a council notice, it’s important to check each line item carefully. GST will usually be clearly stated if it applies to any particular charge.
If you’re ever unsure, you can contact your local council or consult with a conveyancer or tax professional to clarify whether GST applies to specific charges on your council bill.
How Do Council Rates Appear on a Property Settlement Statement?
When you’re buying or selling a property, council rates are usually adjusted during the settlement process.
How Council Rates Are Handled During Settlement:
Pro Rata Adjustment: Council rates are apportioned between the buyer and seller based on the settlement date.
GST Disclosure: Since council rates are GST-free, the settlement statement will not show GST on the council rates portion.
Separate Charges with GST: Any council-related fees or services that include GST (like commercial waste services) will be clearly itemised.
Your conveyancer will handle these calculations to ensure both the buyer and seller pay their fair share of council rates.
If you’re selling a property, any unpaid council rates up to the settlement date are typically deducted from your sale proceeds. For buyers, pre-paid rates might be reimbursed to the seller.
Can I Claim GST on Council Rates for Investment Properties?
If you own an investment property, you might be wondering whether GST on council rates is claimable as part of your business or tax deductions.
The short answer is: No, you cannot claim GST credits on council rates because they are GST-free.
However, if your council notice includes charges or services that are subject to GST (like extra waste collection or facility hire fees), you may be able to claim GST credits for those specific items—provided you are registered for GST and the expenses are related to your taxable business activities.
For investment property owners, council rates are typically claimed as a deductible expense on your annual tax return, but not as a GST credit.
It’s always a good idea to consult with a qualified tax advisor to ensure you’re claiming deductions correctly.
Also Read: Selling Commercial Property Not Registered for GST
Need Professional Assistance? Let CJC Law Guide You
Understanding whether GST applies to council rates can save you from unnecessary confusion when reviewing your property expenses or preparing for settlement.
While council rates themselves are GST-free, additional services or charges from your local council may include GST, depending on their nature.
Always review your council rate notices carefully, and if you’re uncertain about any charges, seek professional advice from a conveyancer or tax specialist.
If you’re buying, selling, or managing a property and need expert advice on council rates, GST, or settlement statements, CJC Law is here to help.
Our experienced team of conveyancers provides clear guidance to ensure your property transactions run smoothly and efficiently. Contact CJC Law today for reliable conveyancing services you can trust.
