Interest rate on overdue rates and charges
Section 133 of the Local Government Regulation 2012 (LGR) and section 125 of the City of Brisbane Regulation 2012 (CBR) prescribe the way that the maximum interest rate on overdue rates and charges is calculated. The prescribed method is based on the calculation used for the interest charged on unpaid State taxes under the Taxation Administration Act 2001 and the Taxation Administration Regulation 2012 (i.e. the Reserve Bank of Australia (RBA) ‘bank bill yield rate’ plus a margin of 8 per cent).
For overdue rates and charges, the bank bill yield rate (3-month bank accepted bills monthly average) as at the month of March in each year is used to calculate the maximum rate of interest to apply for the following financial year.
Local governments are required to set the actual interest rate to be charged on overdue rates each year (up to the maximum interest rate set by the LGR and CBR). This is to be done by resolution as part of the annual budget process. In deciding the interest rate, local governments should document reasons for the interest rate chosen. This will allow ratepayers to understand the basis for the local government’s decision.
The bank bill yield rate as at March 2021 published by the RBA was 0.03 per cent, so the maximum interest rate for the 2021–22 financial year will be 8.03 per cent.
From 1 July 2021, the new maximum interest rate of 8.03 per cent will apply for the 2021-22 financial year and a resolution setting the actual rate to be charged will be required to be made at the budget meeting for the 2021-22 financial year.
For local governments holding their budget meeting on or after 1 July in the budget year, the previous year’s interest rate will cease to have effect from 1 July, and therefore the resolution setting the new rate will need to state that the new interest rate applies from 1 July.
This page will be updated each year with the new maximum interest rate, and local governments will be notified each year following the RBA’s publication of the March bank yield rate.
Maximum interest rate for previous financial years
- The maximum interest rate for the 2020–21 financial year was 8.53 per cent.
- The maximum interest rate for the 2019–20 financial year was 9.83 per cent.
- The maximum interest rate for the 2018–19 financial year was 11.00 per cent.
- The maximum interest rate for the 2017–18 financial year was 11.00 per cent.
- The maximum interest rate for the 2016–17 financial year was 11.00 per cent.
Last updated: Wednesday, Apr 21, 2021