[Tiarne Pearson]

Hi All,

We have a few postponed properties in our LGA that are being transferred due to will/intensity or divorce/separation. One property has transferred recently into the son’s name from the father. Our system Tech One (CiA) makes the postponed rates due and payable when a transfer is processed. Just wondering if anyone has had a similar scenario and what they did? Should the postponed rates really become due and payable in this circumstance?

I have had no luck in making them postponed again due to system limitations and have a case logged with T1.

[Tracey Walker]

Hi Tiarne,

The rates are due and payable by the son. He will then need to apply for postpone if he so wishes to do so.

[Nicholas Lew]

My understanding is that houses may be sold and as long as the land is used as a single dwelling or rural land there is no alteration to the procedure. The mere selling of a house does not require payment of postponed rates owing. The death of the owner also does not alter the position.
We are not on Tech One.

[Robert Hay]

Hi Tiarne

If you look at Section 596 which states, the following:

A rateable person for land for which an application has been made under this Division but not determined, or for which a determination or redetermination of the attributable part of the land value is in force, must inform the council (within 1 month) if land used or occupied solely as a site for a single dwelling-house, or as rural land, ceases to be so used or occupied.

Whilst it relates to change of circumstance it is the 1st sentence which needs to be looked at which shows that if there is a change of ownership then the new owner has not made the application for postponed rates and the postponed should be transferred back to the main account.

The new owner who has become the rateable person due to transfer of ownership should make a new application for postponed rates as per section 585 remembering that the new owner will only be eligible for the current year and or the following rating year.

Robert

[Nicholas Lew]

Hi
Council Rating And Revenue Raising Manual 20.2 Application for postponement:
“The postponement concession does not cease when there is a change in ownership. In the event of a transfer in ownership, councils may wish to seek a fresh application from the new owner, prior to transferring the entitlement, to confirm that they wish to continue with the entitlement. ”
Nick

[Andrew Butcher]

Hi Nick
The manual does cause an issue due to it being so out of date. I recall during the drafting of new legislation this came up and the OLG was not of that opinion any longer. This is not helpful when trying have a consistent approach to applying postponed rates, I agree.
The legislation that passed through both houses of parliament presents a clearer position, and although the legislation has not been asented to it has been passed.
It is a difficult position to provide a difinitive solution given the conflicting advice in the Rating and Revenue Raising Manual.
The new legislation says:

591 Postponement of rates
(1) A council must, in accordance with this section, postpone the payment of rates for land in a rating year where a change in the zoning or other designation of the land under an environmental planning instrument mentioned in section 585 happens if—

(c) the rateable person making the application—
(i) occupies the land when the application is made, and
(ii) owned the land when the change happened, but did not initiate or request the change, and

The new legislation supports the ending of postponed on sale or transfer. It would be interesting to see how the courts would interpret the current situation should a matter escalate to a precedent decision.

Regards,
Andrew

[Nicholas Lew]

Hi Andrew
Thanks for the update. Think we will continue with what we have been doing until given Assent by the Governor.

[Anthony Egan]

Based on the current legislation there is no requirement for the postponed rates and charges to be paid when a property is sold/transferred.

When we issue a 603 Certificate for a property that has postponed rates, we include the following statement:

“This property is subject to postponed rates and, under Section 597 of the Local Government Act 1993 (NSW), the entitlement to the same ceases if the whole of a parcel of land used or occupied solely as a site for a single dwelling-house, or as rural land, ceases to be so used or occupied. The balance of the postponed rates and interest at the date of this certificate totals $x,xxx.xx.”

We also provide the requesting solicitor an Application for Postponed Rates for the purchaser to complete and return to Council to confirm that they are aware of the potential liability if the use of the property changes under their ownership.

We have also noticed that when a property has been sold/transferred and the new owner has not completed an Application for Postponed Rates, the Valuer General does not provide a postponed land value component for the rate assessment following a General Revaluation.

Regards

Anthony

[Andrew Butcher]

Hi Anthony

I understand your interpretation, however the issue is not the use its the application that is the problem. In particular is compliance that has been driven by Sarbanes-Oxley Act 2002 from the United States that has affected compliance positioning around the world.

Principally, the current legislation is not as clear as it should be and is open to intrepetation. Accordingly the OLG has reformed this under the Local Government Amendment Act to firm up the application process for transfers in ownership and the discontinuance of postponed rates following a transfer or sale as was their initial intention. Unfortunately, the Rating and Revenue Raising Manual has not been updated to make this clearer.

Section 597 leads with ‘a person ceases to be entitled to a postponement of rates under this division….’, the person entitled to postponed is the person that made the initial application, that person would be liable for the accrued postponed to the date of transfer or sale and new owner would need to apply from the next rating year per Section 585 Who may apply, refers to ‘the rateable person for land….’.

Who knew there would be such passionate debate about postponed rates? For the purposes of continuity councils that have a policy around this would in my view be best advised to continue, however as I said earlier the amended legislation has been passed just not commenced and it gives a clearer policy position from the government, just my view.

Regards,
Andrew

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