Commercial Rates in the ACT

The Property Council continues to advocate on the progression of Tax Reform being undertaken by the government - of particular focus is the disproportionate impact on the commercial sector.  This year’s budget contained a further 6% increase to commercial rates, while stamp duty receipts have also increased rather than been reduced and rates have doubled during the same period.

General tax rates for commercial properties have spiked since the ACT Government’s tax reform began in 2012. Commercial property owners are bearing the brunt of the reform, experiencing 25 per cent increases in 2018-19 and squeezing property and business owners out of the market.

We represented members recently at the Budget Estimates Assembly Committee and at a recent lunch with the Chief Minister in which we were invited to provide input to key changes as we hit the halfway mark of the reforms and input in to the review of the tax reforms with the ACT Government. 

Following the changes made by the ACT Government, there are five major challenges we recognise with the taxation and valuation model including:

  • It disproportionately penalises commercial properties compared to residential properties – the top marginal general tax rate for commercial property is nine times higher than for residential and the highest commercial rates are more than double what they were in 2012.
  • Recent property valuations have been too high with very little explanation or evidence to support the increases – these variations will determine rates for the next three years despite signs of a slowing property market.
  • Some property owners have been back billed due to higher valuations of property where land use has changed retrospectively.
  • The appeals process is inadequate and not independent – property owners wishing to appeal can either write an objection letter or enter into a costly ACT Civil and Administrative Tribunal Hearing.
  • There is a lack of transparency about how rates will change moving forward – the budget forecasts do not include any plans to reduce stamp duty on commercial property about $1.5 million.

As an example, a residential property and a commercial property both worth $800,000 would attract the following rates in 2018-19 regardless of their use:

Rates

Residential

Commercial

Fixed charge

$815

$2,463

Variable charge

$3,832.65

$36,074.18

Safer Families Levy

$30

 

Fire & Emergency Services Levy

$336

$6,233.40

TOTAL

$5,013.65

$44,770.58

 

The Property Council welcomes input from members into what changes need to occur in the next phase of tax reform and examples of the impact this is having on the commercial sector.  Please contact Adina Cirson acirson@propertycouncil.com.au with your views.