Section 150 of the Local Government Act 1999 states that:
"A council should, when making and adopting policies and determinations concerning rates under this Act, take into account the following principles:
- rates constitute a system of taxation for local government purposes (generally based on the value of land);
- rating policies should make reasonable provision with respect to strategies to provide relief from rates (where appropriate), and any such strategies should avoid narrow or unreasonably restrictive criteria and should not require ratepayers to meet onerous application requirements;
- the council should, in making any decision, take into account the financial effects of the decision on future generations"
This means that rates are not a fee for service but a system of taxation which should be raised on the same basis for all ratepayers, unless there is justification for differentiation!
The Local Government Association of South Australia has an excellent resource with regards to rates. It is located at http://www.lga.sa.gov.au/site/page.aspx?u=326
Council is presented each year with a Rating Discussion Paper as background for discussion of any proposed changes to Council's rating policy for the upcoming financial year.
Recovery of Rates - Section 184
As an initial step, before formally initiating the Section 184 process, Council will send to the ratepayers, who are in arrears over 3 years, a letter of demand advising the ratepayers that should they not pay their outstanding rates, Council will initiate the Section 184 process for the sale of their land for non-payment of rates, pursuant to the Local Government Act 1999.
The letter which will be sent to the ratepayers will advise them that should they not pay their rates in arrears, a further letter will be sent and all interested parties – being mortgagees, tenants, licensing bodies and other persons who may have an interest in the relevant land – will be notified of the ratepayer’s rating debt.
For the above purpose, a letter of demand stating among other things:
- Council has not made the decision lightly to commence the Section 184 proceedings;
- Outline the costs that the ratepayer will incur in Council undertaking the sale of the property;
- Invite the resident to come into Council and make arrangements to pay their outstanding rates;
- If an arrangement is put in place any failure to honour that arrangement will result in the Section 184 proceedings commencing forthwith without further notice;
- Existing minimal payments being made may not be sufficient to discharge the debt and the ratepayers are encouraged to come into the Council offices to discuss;
- Forewarn residents that interested parties including any mortgagees, licensing bodies etc may be notified if the rating debt remains unpaid;
- Outline the provisions of Section 182A of the Act regarding Postponement of Rates for Seniors.
The Flinders Ranges Council will notify via Council’s newsletter that Council will initiate Section 184 proceedings to sell ratepayers properties to recover rates in arrears. Council will also inform the ratepayers that interested parties will also be notified of the ratepayer’s default as part of this process. Council will include advice regarding the ability to make payment arrangements and the availability of Section 182A pertaining to senior postponement. Council will advise that it would like to give the residents one final opportunity to meet their obligations prior to initiating proceedings, and that, failing an appropriate outcome, the Council will proceed with the sale of the properties.
Following the letter of demand outlined above, and expiration of the period for time to pay, a further letter of demand will be sent on lawyers letterhead. This letter will be provided to interested parties which will be the start of the Section 184 proceedings.
Any property not having made an arrangement to pay (including payment in full) will then receive an “official” notice of demand under Section 184 which will be posted on the property, sent by registered mail to the owner and advertised in a newspaper. This Notice will formally commence the Section 184 process under the Act. Should the relevant rates in arrears not be paid within one month of service of the Notice, the Council will be entitled to sell the properties by way of a public auction.
It is important that the Council ensure that each property is sold in a proper and transparent fashion. As such, the assistance of licensed valuers and/or real estate agents is required for the sale process.
If any property cannot be sold at auction, Section 184(11) enables the Council to sell the land by private contract.
Once land is sold pursuant to section 184(14) of the Act, the title vested in a purchaser will be free of all mortgages, leases and licences.
The Section 184 process is necessarily long and procedural and there is ample opportunity throughout the process for the arrears to be paid or a payment agreement entered into.