Rates, land tax and the leasehold system: how ACT property charges work

If you own property in Canberra, or you are thinking about buying here, the local system of land charges works a little differently to the rest of Australia. There is no freehold land, rates fund more than just bins and roads, and land tax has its own rules. Here is a plain-English guide to how it all fits together, and where to find the official figures for your own property.

The 99-year leasehold system

Unlike most of the country, land in the ACT is not sold as freehold. Instead it is held under a Crown lease, usually for a term of 99 years. This dates back to the founding of the national capital: the Seat of Government (Administration) Act 1910 provided that Crown land in the Territory would not be sold as freehold, and the first leases were auctioned in December 1924.

In practice this rarely affects everyday owners. As the ACT Government puts it, if you hold a Crown lease on a property you effectively own it. Lessees can apply to the Territory Planning Authority for a further Crown lease at any time during the term, and a renewal is generally granted for little more than an administrative fee where the land is not needed by the Territory or the Commonwealth. The lease does set out what the land can be used for (residential, commercial and so on), which is why changing the permitted use can require a lease variation.

General rates

Every property owner pays general rates. Because the ACT has a single level of government, rates here fund more than the usual council services. They contribute to schools, hospitals, public transport and community facilities, as well as roads and waste collection.

Rates are made up of two parts. The first is a fixed charge that depends on the property type, and the second is a valuation charge. The valuation charge is worked out by applying a rating factor (a percentage) to the property's average unimproved value, or AUV. Higher-value blocks sit in higher rating brackets, so the scale is progressive, and houses and units use different sets of factors.

The AUV is not a single year's figure. From the 2021-22 rating year onwards it is averaged over the last five years of unimproved land values, as determined by the ACT Valuer-General. Averaging is designed to smooth out sharp year-to-year swings in land values so your rates do not lurch up or down with the market.

Land tax

Land tax is separate from rates and only applies to some properties. It is charged on residential properties that are not your principal place of residence, such as a rented or vacant home. The place you actually live in is generally exempt.

Like rates, land tax in the ACT is made up of a fixed charge plus a valuation charge based on the AUV, and it is assessed quarterly. If you own an investment property or move out of a home and rent it out, it is worth checking your land tax position, because the obligation can change with how the property is used.

Where to find the official information

The authoritative source for all of this is the ACT Revenue Office. Its website sets out the current fixed charges, rating factors and thresholds, and it publishes a free rates and land tax calculator so you can estimate the charges for a property using its AUV. The calculator figures are GST exclusive and do not include any interest or penalties.

• General rates, fixed charges and how they are calculated: the ACT Revenue Office rates pages.
• Land tax rules, exemptions and quarterly assessment: the ACT Revenue Office land tax pages.
• Crown leases, lease terms and renewals: the ACT Planning website.

Charges, thresholds and the fixed charge amounts are reviewed each financial year and announced in the ACT Budget, so always check the current year's figures before relying on them. This is a general explainer rather than personal financial or tax advice. For your own circumstances, confirm the latest numbers with the ACT Revenue Office or a qualified adviser.