Thursday, 19 June 2014

Do you not want to pay more Rates on your investment property , you must keep up to date with this decision.

Do you not want to pay more Rates on your investment property , you must keep up to date with this decision. 

Last month, Supreme Court judge Justice Duncan McMeekin ruled it was illegal for Mackay council to charge a different rate for those properties leaving it facing a refund bill of $1.6 million on 7742 properties.
For other councils that have instituted the rating system, such as Brisbane and the Gold Coast, the bill could be much higher.

Mackay Regional Council will appeal judgment on investor rates

Pamela Frost | 2nd May 2014 8:32 AM Updated: 2:18 PM

MACKAY Regional Council will appeal the Supreme Court judgment made earlier this week that determined their decision to increase rates on non-owner occupied properties was invalid.
The Council has the support of the Local Government Association of Queensland (LGAQ) and its legal advisors, King & Company.
LGAQ chief executive Greg Hallam said the decision not only jeopardized the differential general rating capabilities of the council, but had far reaching implications for many other councils across the state.
"Many councils presently use the differential rating power to categorise residential land based on whether it is used as a principal place of residence, or for investment purposes,'' Mr Hallam said.
"The court's decision needs to be appealed to properly test the limits of the differential rating power in this regard."
MACKAY Regional Council is facing a refund bill of about $1.6 million after losing the court case against a group of investment home owners.
The council's lawyers are trying to determine whether they have a case to appeal a Supreme Court judgment that labelled their rating system as "improper".
Justice Duncan McMeekin determined this week that the council's decision last year to adopt a rating system under which homeowners would be charged more if a house wasn't their primary residence, should be set aside.
Solicitor Greg Smart, who represented the group of investment property owners that took council to court, said the judgment could mean the council's budget, passed in July last year, was now invalid.
This would also include all rates notices issued this financial year.
Owners of investment properties were charged an extra $200 a year, on average, above the normal rates under the new system.
In July last year, the council confirmed this affected about 7742 properties in the region, which equated to about $1.6 million.
The council is seeking legal advice on how it should proceed.
Chief executive officer Barry Omundson said the council was disappointed with the judge's decision and was in legal discussions on whether it should appeal the decision.
Meanwhile ratepayers have been left in the dark until a decision is made.
A council spokesman said a recorded message on a council phone was informing callers the council was negotiating with legal counsel.
The spokesman also said they had received only about three calls seeking clarification following the judgment.
Legal representatives on both sides have until next Wednesday to finalise everything.
Investment property owner Peter Crossan said the decision meant investment homeowners would not be paying the high rates anymore.

"It's been a long time coming, but it was worthwhile," he said.

Previous articles of interest
June 4, 2014

If you own an investment property in Queensland, chances are you’re paying higher council rates than the owner-occupier next door

Yep, as soon as ‘Big Brother’ finds out your property is being rented out, you’re likely to be hit with some nasty extra rates. The logic behind it is that you’re getting a tax deduction every year for your rates, so why shouldn’t you be charged accordingly?
Problem is, many people get a tax deduction for their phone each year, based on the fact they make work calls. Yet everyone pays the same price for that phone. Likewise, some people get a deduction for wearing sunglasses at work, but everyone pays the same amount for their sunglasses. Why then, should you be charged more for council rates?
This topic has burst onto social media, thanks mostly to a recent case in Mackay. In a nutshell, a group of investors, called the Mackay Investor Rates Committee, took the Mackay Regional Council to court over the fact they were being charged higher council rates simply because they owned investment properties, and didn’t live in them as their principal place of residence. It went to the Supreme Court, which ruled it was in fact illegal for a council to charge investors higher rates than owner-occupiers.
The Queensland Local Government Association has now launched action in the Court of Appeal. If the appeal is dismissed, Mackay Regional Council would face a massive refund bill of $1.6 million for 7742 properties. But the much bigger issue is that the decision would potentially leave the gate open for thousands of investors around Queensland to launch action. It also means many councils – 20 in fact, including Brisbane, Gold Coast and Townsville – would face losing millions of dollars in revenue each year if they have to charge investors the same rates as owner-occupiers. No wonder councils are scared.
Destiny found and investor Margaret Lomas, who has long inspired and fought hard for many ‘mum and dad investors’, is leading a massive charge against this issue. She’s encouraging people to campaign on social media with #equalratesforpropertyinvestors.  She’s even gone to A Current Affair this week to voice her concerns.
And you can see why she’s annoyed. Many investors work hard to own an investment and not rely on the pension down the track. Why should they be punished for it simply because they don’t live there? Even the recent ruling in Mackay was handed down based on the fact that rates are given to property owners based on the land size and value, not the use of the land.
I remember receiving a letter from the Gold Coast City Council some years ago as soon as I moved out of my unit and asked if I was now renting it out. Soon enough, the higher rates started coming in. Until now, it seems there was no choice but to pay the extra fees. Now, investors are fighting the fight.
Peter Crossan is one of the investors taking on Mackay Regional Council. He says the whole court case has been fought on donations to a trust fund of legal firm Wallace & Wallace.
“We now need to raise funds for the appeal. Any unused funds will be returned on a pro-rata basis,” Peter says.
Anyone interested in donating to the trust can do so by emailing

Councils face huge rates refunds

May 22, 2014

Councils across Queensland could soon be forced to pay back hundreds of millions of dollars in rates levied on investors, after a Supreme Court decision ruled their collection was invalid.
At least 19 councils have been charging investors higher rates than those residents who live in their own homes - a decision recently ruled as invalid by the Supreme Court.
This means those councils - which include Brisbane, Logan, the Gold Coast, Moreton Bay and Townsville - could be forced to pay the inflated rate bills back.
But it also creates a nightmare in other areas - for example, investors who have claimed rate payments on tax bills might have to refund those deductions too. 
And it raises the wider question of whether it is undemocratic for a council to make a decision like this about a group of people who own part of the community, but don’t have a right to vote in local elections. 
An appeal is being worked on, with the backing of the Local Government Association of Queensland, in a bid to have councils’ interpretation of the differential rating system, which has been used by some councils for more than 20 years, declared legal.
Council sources said the Supreme Court decision meant up to $300 million a year - across the state - was now in doubt and if an appeal was not successful general rates would have to be increased substantially to pay the refunds.
That could throw current council budgets into doubt, and lead to a big increase in residential rates across the board, to make up the extra funds now being billed to investors.
It is still unclear - but doubtful - whether the landmark decision would be retrospective, making councils pay back previous inflated levies.
The case was taken to the Supreme Court by a group of Mackay investment home owners who were being charged an extra $200 a year above the normal rates.
The court declared that investors should not have to pay higher rates and that the rating system amounted to an “improper exercise of power’’ under the Local Government Act.
Councils have believed differential investor/home owner rates were covered under State Government regulations - something now thrown into doubt.
But more than that has been thrown into doubt by this one decision, which will soon be subject to debate in the Court of Appeal, and emotions are running high in many councils.
For example, investors gain a revenue advantage over other ratepayers by profiting from an investment. Doesn’t that mean they should be forced to pay higher rates, in the same way an industrial or commercial property landlord might?
That’s one side of the equation. But what about investors? Shouldn’t they have the right to then vote in the local council area where they have an investment property, particularly if decisions are being made in relation to their asset?
At every juncture, this decision is mired in complexities - and councils are now in crisis talks on the best way to proceed.
In the meantime, what do you think? Should a Brisbane property owner, with an investment unit on the Gold Coast, pay higher rates there than someone else who lives on the coastal strip?
And if so, shouldn’t they be entitled to have a say in any decision making - through the right to vote in the area where they have an investment?
Email: twitter: @madonnamking