Much of a Council's income comes from taxes on property (land and buildings) called rates. Each year owners of property - including houses, farms and businesses - must pay rates to the Council. The amount paid depends on the value of their property. For example, the amount of rates paid by the owner of a house or flat will be much less than the amount paid by the owner of a large property or business.

There are some organisations, however, that are either not required to pay rates at all on their property or pay a significantly reduced amount in Council rates. Organisations that fall into this category include the State and Federal Governments, charities, churches, hospitals and schools.

Before collecting any rates a Council first establishes exactly what services will be provided in the next financial year and how much those services are expected to cost. It formally adopts a budget. Within this budget the amount of money that will be collected from other sources is estimated. The Council can then work out how much money must be collected from the community in the form of Council rates to balance its budget. The Council discussions are open to the public and the budget is available to the public.

Under financial accountability reforms introduced from 6 January 2022, each Council must adopt annual business plans and budgets and declare general rates by 15 August each year. Adopted business plans must also include a statement about any changes from draft business plans and the reasons why. Under the Local Government (Financial Management) Regulations 2011, Councils are now required to report on expected changes to general rate revenue in their annual business plans, and enable comparability between Councils. This enables ratepayers to understand and engage with Councils about this decision more easily.

Within the framework of the Local Government Act 1999 (SA) there is some degree of flexibility to allow Councils to take into account local issues. Therefore, the way one Council sets its rates may be different to that of another Council and the level of rates overall reflects different costs and service provision levels (e.g. some Councils run a swimming pool and some don't).

A Council must set a policy on how it will determine rates. This is a broad statement by the Council of the approach that it will take and the reasons for this. This process helps to ensure community accountability. After a Council sets its rates for the year it sends out a rates notice or invoice setting out how the rates can be paid. Included with this notice is a brief summary of the Council's rating policy and information on where the full policy document can be seen.

Councils determine how much each ratepayer pays in rates by taking into account property values in the area. The property values used by Councils are usually those set by the Valuer-General. If you believe the value set is inaccurate, you can object.

There are 2 possible types of valuations available to Councils, which are:

Failure to pay rates can result in a debt which becomes a charge against the land. This means that the debt will transfer to any subsequent owners of the property. In extreme cases, a Council can sell a property to recover unpaid rates.