Councils criticise new rates ruling

The Western Australian Local Government Association has criticised the state government’s decision to retain the amnesty on council rates for independent living units in retirement villages owned by not-for-profit organisations.

Local government minister Ljiljanna Ravlich has rejected advice from the Local Government Advisory Board, which recommended that the Local Government Act should be amended to allow for the rating of land used for charitable purposes.

Ms Ravlich said in making the decision she was aware of its financial impact on a number of local governments but was particularly mindful of the concerns of many retirees.

WALGA President Bill Mitchell said the minister’s decision would affect many councils, especially the bigger councils because they have a larger aged population.

“We have absolutely no problem recognising that concessions should be given to retirees and no one is arguing with that,” he said.

But these are concession taken from the pockets of local government who are still expected to provide services such as libraries, bins and road maintenance.”

“If the state government wants to be benevolent, they should compensate local government.”

Currently, local council have the option to rate the properties concerned and the community has the option to appeal for exemption through the State Administrative Tribunal.

The minister said previous decisions by the courts and the State Administrative Tribunal had found properties owned by charitable not-for-profit organisations should be exempt from rates.

According to Mr Mitchell, problems arise from uncertainty pertaining to what is defined as charitable purposes, which is separate from the ‘not for profit’ category.

“When homes are subsidised by church groups, and similar, it falls under ‘charitable purposes’ however some of these independent living units are very profitable so they need to be assessed on an individual basis,” he said.

Mr Mitchell said Australian Taxation Office rulings were used to define ‘not for profit”.

In a statement, Ms Ravlich conceded that commonwealth taxation legislation for charitable organisations had not assisted in clarifying the situation for rating by local government.

Mr Mitchell said a clear definition of what is a charitable purpose is needed and one way around the issue would be adequate compensation paid for what the state government deemed is charitable purpose, instead of using the ATO’s definition.

“Currently, you apply for a not for profit category and the ATO run their ruler across it to determine if you are in or out and those deemed not for profit are making a quantum leap in saying they are charitable purpose,” he said.  

Mr Mitchell said a clear and agreed definition of what constitutes charitable purpose in terms of independent living units would be a good start.