Guide · Last Updated 4 August 2026
The Rates Notice Question: Why It Isn’t the Evidence You Think It Is
It arrives every year, it has an official number on it, and it looks like a valuation. Here is what a council rates notice actually measures, why auditors decline it on its own, and how to use it properly.
William Spark, Founder & Director
2025 SMSF Adviser Awards, Newcomer of the Year Winner · About
Is a Council Rates Notice Enough for an SMSF Property Valuation?
Generally no. A council rates notice is a rating valuation prepared for levying rates, not market value evidence. It often lags the market and lists no comparable sales, so auditors will not usually accept it on its own. It can support other evidence such as an itemised valuation report.
The rates notice is the most commonly offered piece of evidence at SMSF audit time, and one of the most commonly declined. The reasons are structural, not pedantic, and understanding them makes the whole evidence standard easier to meet.
What a Rates Notice Actually Is
The figure on your rates notice comes from your state or territory valuer-general, produced by mass appraisal: statistical models valuing thousands of properties at once for the purpose of levying council rates and land tax. Depending on the state, the number shown may be site value or unimproved land value, which excludes your buildings entirely, or capital improved value, which includes them as a modelled estimate. None of these figures involves anyone assessing your property against the recent sales of comparable properties, and the valuation date is frequently a year or more before the 30 June you are reporting.
In other words, it answers a different question. Rating valuations exist to spread a tax burden fairly across a municipality. SMSF reporting under regulation 8.02B asks what your specific property would change hands for at your specific reporting date, supported by evidence an auditor can verify. A number produced for the first question does not answer the second.
Why Auditors Decline It on Its Own
Your fund’s auditor must verify that the reported value rests on objective and supportable data, and lodge a contravention report if it does not. A rates notice offers the auditor nothing to verify: no comparable sales, no methodology they can follow, no connection to market conditions at the reporting date. The land-value problem makes it worse, since in several states accepting the notice would mean reporting a property with a house on it at the value of the dirt underneath. The full evidence standard, including what the ATO explicitly accepts and rejects, is set out in our complete guide.
How to Use It Properly
Used correctly, the rates notice is corroboration. Paired with evidence that does meet the standard, such as a valuation report listing 5 to 10 comparable sales, it adds a second, independent data point that supports the concluded figure. Auditors like agreement between sources. What they cannot do is build a verification on the notice alone, any more than they can on an undocumented trustee figure or an automated online estimate.
If the rates notice is currently your fund’s only evidence, the fix costs less than the rates themselves. An independent desktop report with itemised comparable sales, methodology stated and a signature behind it is $299 + GST for residential or $425 + GST for commercial, delivered in 1-4 business days with no inspection.
Frequently Asked Questions
Why won't my auditor accept the rates notice by itself?
Because it is not market value evidence. Rating valuations are mass appraisals prepared for levying rates and land tax, they are often dated a year or more before your reporting date, and in several states they value the land only. The auditor needs evidence of what the whole property would sell for at 30 June.
What does a council rates notice actually value?
It depends on the state. Valuer-general assessments variously show site value, unimproved land value or capital improved value, produced by mass appraisal across thousands of properties at once. Even capital improved value is a statistical estimate for rating purposes, not an assessment of your property against recent comparable sales.
Can the rates notice be used as supporting evidence?
Yes. The ATO treats valuations as needing objective and supportable data, and a rates assessment can sit alongside stronger evidence such as itemised comparable sales. It corroborates a figure; it does not establish one.
Is a rates notice better than nothing at audit time?
Marginally, but a fund relying on it alone should expect a query, and persistent reliance risks an auditor contravention report under regulation 8.02B. The gap between a rates notice and acceptable evidence is exactly what a desktop valuation report fills.
What evidence does satisfy the ATO for SMSF property?
Evidence a third party can verify: recent comparable sales with details listed, market data from reputable sources, and a stated method connecting the evidence to the value. An itemised valuation report, a well-documented trustee valuation or an agent appraisal listing its sales can all qualify.
Turn the rates notice into corroboration
An ATO-compliant valuation report with 5 to 10 itemised comparable sales gives your auditor something to verify, and your rates notice something to agree with.
Order residential ($299 + GST) · Order commercial ($425 + GST)
Last updated 4 August 2026. General information about valuation evidence, not financial or tax advice. Speak to your accountant or adviser about your fund.
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