What Is The Difference between Land Tax and Rates?

Hi all,

I feel like this will be an obvious one for some, but can't seem to get a clear answer.

I believe land tax is paid to the SRO and is except for Principal Place of Residence and Rates are paid to the council for bin services etc?

Would appreciate some guidance



  • +3 votes

    Rates pay for local government. Land tax is only charged to investors and goes to the state government.

    • +2 votes

      Land tax is only charged to investors

      This part is not always true - it can vary somewhat from state to state as to what types of properties attract land tax. Eg. in a number of states a beach or holiday house will be captured.

  • -2 votes

    Ask Janitor Willie he'd know


    No idea how taxes work but I thought depending on your area sometimes also if you own too much land especially if not held in your individual name you get taxed (kind of like in monopoly you build too many hotels you get charged extra land tax? Maybe I have no idea what I'm talking about playing monopoly with the kids)!

    Rates is just what your municipal government charges to supply amenities and local levys like bins etc

  • +2 votes

    Land Tax is an opportunistic cash grab by State Governments on the basis of "If they can afford property, then they can afford to give us more money". Land Tax does not apply to your principal place of residence, so many people don't know it exists. You get absolutely nothing in return for the thousands of dollars you pay in land tax every year.

    Rates are levied by the local council, and these are paid by the owner of the property to fund local roads, bins, parks, compliance and other services provided by the local council.

    • +2 votes

      One person's opportunistic cash grab is the rest of societies progressive taxation ;-)
      Land tax goes to consolidated revenue in the states, funding schools, hospitals, law enforcement, emergency services etc that add amenity to a land owners property.

      • +1 vote

        That can be said of any tax.

        Toilet paper tax - goes to funding etc. etc. where it would add use to said purchased toilet paper.


          Keyword there is progressive. A toilet paper tax wouldn't be a progressive tax imo


            @e-Sassin: All tax goes to consolidated revenue, not just progressive tax.


              @tshow: Love the word "progressive" … it sounds so decent and earnest, like we're making progress by taxing you.

              Of course, when you learn it means that the more productive you are, we will progressively take more and more of your income it has a rather different connotation.

              • +1 vote

                @Seraphin7: It's a romantic notion that a collective of people of high moral aptitude can justly and with great wisdom manage the people's wealth for the greater good.

                Whether that notion is tenable or not is a matter of great debate.

                • +2 votes

                  @tshow: Yes, we seem to be progressively moving to this society where a group of high minded individuals, as you say of no doubt impeccable wisdom, seem to believe that they are far better managers of money than the people who actually earn it.

                  Taken to its logical conclusion, we end up back in the time of feudal serfdom … the proletariat effectively give up the totality of their resources in exchange for a subsistence existence and the "promise" of protection from the great and the good.

                  Sounds precisely like progress to me.

                  • +1 vote

                    @Seraphin7: You'll find that the proponents of the "progressive" system will proclaim that this system is precisely there to prevent

                    end up back in the time of feudal serfdom … the proletariat effectively give up the totality of their resources in exchange for a subsistence existence and the "promise" of protection from the great and the good.

          • +2 votes

            @e-Sassin: Why is it good to be progressive? That's just a tax on productivity and hard work.


              @HighAndDry: Not sure why the anti tax crew remain in high taxing Australia. Northern Syria is a comparative tax paradise.
              Progressive taxation is not related to productivity. I can be incredibly productive but earn a low wage and pay little in progressive taxes.
              Progressive taxation taxes those with higher resources at a higher rate. For income tax, a higher income attracts a higher tax bracket.

              All high tax payers have the option to cut their incomes if they feel they are losers under this deal, but few low income earners are able as easily raise theirs.

              • +1 vote


                I can be incredibly productive but earn a low wage

                By all objective measures you would be not-very-productive.

                What you call wages (or pay or remuneration or returns) is how society as a whole has decided to reward productivity.

                In an economy where people decide how to spend their money, that's the ultimate in democratic expression.

  • +2 votes
    Council Rates - Local Government Tax

    Calculated on: Can differ but generally on CIV (market value of dwelling) or NAV (market rental for commercial property).
    Council figure out how much they need, then distribute required revenue across properties the municipality weighting it by value of property.
    Formula for this is Total revenue required/Total value of property = 'Rate in the dollar'. Multiply Rate in the dollar by value of dwelling = your rates.
    Rationale: If you are worth more you can pay more.
    Used for: Providing amenities in the municipality (Parks, elderly services, bins, permits, being planning authority etc)

    Land Tax - State Government Tax

    Calculated on: Site Value, applied against tax tables the same way your income is applied against tax tables to calculate payable amount
    Rationale: If you are worth more you can pay more also haha (profanity) you.
    Used for: Who the *** knows

    • +1 vote

      Funny my areas' lower end house values (market value) have dropped in half since GFC. Yet rates go up incrementally, annually. Valuation is not relevant.


        This is a classically misinformed and flawed way of looking at council rating.

        Valuations are for calculating the distribution of revenue required by council. Not how much they charge. Local governments (in VIC anyway) are subject to rate capping meaning they can only increase by a certain percentage. This year was 2.5% for my council. I.e if they got $100m last year, they now get $102.5 this year.

        The reason why your logic is flawed is because council require certain amount of revenue to provide services irrespective of total value of assessable properties. If the amount total value of properties slashed by half, do you think the council can still afford to provide services to the same number of properties on half the rates revenue?

        Not likely.

        Your rates can actually go down if your property falls by more than the average. Yours dropping by half (since GFC) but rates still going up means that your property is doing average relative to the other properties in your municipality.


      That is how land tax works as we paid it for a couple of years and then we stopped getting the invoices. I asked why, so that I was lumped with a late payment fee, and they said it is based on the value of the land so we didn't have to pay unless the value goes above a set amount. Haven't had an invoice since so no complaints here. They did build a lot of high rise apartments in the suburb so that would have affected land prices.


    I thought Land tax was paid on unimproved land. IE no mods, sheds, dwellings etc. So investors don't pay for what they don't use/benefit from. If you improve the land you then pay rates.

    Rates are collected to help fund management of the area by the council.



      If that were true you would pay land tax on your back garden which is not the case.

      Land tax is calculated on Site Value, which if you look up the definition basically means a hypothetical valuation as if the property were a vacant parcel/development site.

      An 'investor' doesnt avoid land tax if their site is actually vacant. They still pay. In fact there are actually penalties for leaving a site vacant (to encourage full utilization of land).


      Not quite but it may be a state variation thing I am not aware of.

      The summary of the difference is:
      Land tax - because you own land and because they can tax you. It is to prevent mass and perpetual land holding.

      Rates - cost of road, paths, parks, sanitation.