The Northern Territory Manual for Council Staff working with Rates and Charges
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dhcd.nt.gov.au Page 26 of 35 March 2017, version 12 It should be noted that although the above reference means that technically all instalments become due and payable if a ratepayer defaults and interest can accrue on the total of unpaid rates, Section 161(3) allows for a council to relieve a ratepayer from the consequences of default to an extent decided by council. Demonstrating best practice, the larger councils and some of the regional councils have resolved that interest will only accrue on the overdue instalment amounts, not the whole outstanding balance. The relevant interest rate is a rate interest fixed by the council as the relevant interest rate. A council may: (a) fix a rate of interest as the relevant interest rate; or (b) vary a rate of interest previously fixed as the relevant interest rate. Setting the interest rate It is not good practice for council to set the interest rate without providing information to the ratepayers as to how it was derived. Some councils adopt an interest rate slightly higher than a credit card rate, based on the premise that a person will normally pay the bill with the highest interest rate first (the rates bill). With interest rates significantly reducing over the last few years, councils have not followed suit to lower their interest charge. A defendable basis on which to base the interest rate, is to use the same rate as that charged by the Northern Territory Government for overdue tax debts. The rate charged by the Northern Territory Government is generally similar to what other state jurisdictions charge. For the 2015-16 financial year, the interest rate was 10.15%. Details can be found at: http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/AboutTerritoryRevenueOffic e/Pages/InterestPenalties.aspx. Because the interest rate mentioned above may not be available on the Treasury website until June of the preceding financial year, for the purposes of consultation and within council plans, the interest rate could be referred to as the statutory interest rate set out at section 35 of the Northern Territorys Taxation Administration Act. The actual figure can be inserted into a declaration before the rates are declared. As an alternative to obtaining the figure from the Treasury website indicated above, councils can calculate the rate by using the following process: 1. Once it is a few business days into June, go to the following link: http://www.rba.gov.au/statistics/tables/#interest-rates and click on Interest Rates and Yields Money Market Monthly F1.1. 2. Go to column E in the spreadsheet which is titled 3-month BABs/NCDs and find the May figure for the preceding financial year. For May 2016 it was 2.01%. 3. Add 8% to the May figure and that is the statutory rate. For the 2016-17 financial year it is 10.01%. http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/AboutTerritoryRevenueOffice/Pages/InterestPenalties.aspx http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/AboutTerritoryRevenueOffice/Pages/InterestPenalties.aspx http://www.rba.gov.au/statistics/tables/#interest-rates
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