---
title: Where Do Rates Payments Go?
description: Bob made a payment on his rates. Where did his payment go? Learn more about how payments on your council rates are handled by Rates Officers. Yeah - it's complicated.
image: https://news.councilwise.com.au/hubfs/1720592961218.jpg
---

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How Rates Work

# Where Do Rates Payments Go?

Bob made a payment on his rates. Where did his payment go? Learn more about how payments on your council rates are handled by Rates Officers. Yeah - it's complicated.

[Scott Christian](https://news.councilwise.com.au/author/scott-christian)

 Jul 26, 2024

---

Where do payments you make on your council rates go? Yes, your rates are made up of a general rate (residential or commercial or similar), perhaps a municipal charge, likely a bin collection and a waste management fee, there could be a 'fire levy' or some such, maybe even a special rate - that is fairly easy to understand. Ummm, kind of.

For a rates officer, things are a bit more complex, and once again, it can vary between areas in Australia. Here is the simplified (hah!) version:

Bob owes $5,000 in rates. this is made up of $1,000 in last years rates (overdue!), $500 in interest accrued, $500 in debt collection costs accrued, and $3,000 in 2024-25 rates (and because he is in arrears, that is due as well).

Bob walks into council offices and tells customer service he wants to pay $1,500 on his rates. Does Bob get to decide what debt is paid first? No. Absolutely not. So what is the priority of payment?

Debt collection costs are paid first - so $500 on that. Then comes interest - so $500 on that. THEN comes rates - so $500 on that. Bob's current position? He owes $500 in last year's rates (accruing interest), and still owes $3000 in the current rates.

And the math gets pretty intricate. Interest accrued (and paid) needs to be apportioned out to each of the rating components (general rate, municipal charge, waste, special rate etc) and accounted for. For some councils, they even put such interest into seperate GL lines, which increases the fun of reconciliation.

And the cherry on top? In some jurisdictions, late payment on an instalment results in a penalty (usually a percentage of the debt, say 2%), and THAT gets priority as well. In these cases, the priority of payment shifts to 1) Costs, 2) Interest, 3) Penalties, and 4) Rates.

For that guy that told us 'rating systems are just glorified accounts receivable systems', we very much beg to differ. To all rates officers in local government, respect. HUGE respect.

And Bob - pay your rates on time. Save us the headache.

[How Rates Work](https://news.councilwise.com.au/tag/how-rates-work)

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