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VIC - Statement of Adjustments - Quarterly adjustment

avatarLEAP
As we had previously advised,there are two different ways to calculate the quarterly adjustment:-
  1. Count the number of days in the quarter and divide the amount by that number of days to get the daily rate; and
  2. Multiply the quarterly amount by 4 and divide by the number of days in the year.
As neither way is incorrect and we had some clients wanting the calculation done one way and other clients wanting the calculation done the other way LEAP had to make a decision as to which way to do the calculation. We therefore consulted with Russell Cocks who is a conveyancing expert and he advised that he relies on the Supreme Court Act which requires that adjustments should be made on a daily basis and therefore we should be multiplying the amount by 4 and then dividing by the number of days in the year. We have now been advised by Russell Cocks that he will be publishing an article in the July Law Institute Journal part of which states:-

"The advent of quarterly charges for rates is a relatively recent consideration that may justify a review of past practices, at least in relation to rates or instalments of rates which are not presently due and payable. In this regard s.175, Local Government Act 1989 whilst still requiring payment of any arrears in full, now entitles a purchaser to the benefit of any instalment payment plan that was available to the vendor.

When rates were properly regarded as an annual charge it was appropriate that adjustment was made on an annual basis, calculated by reference to the number of day between the end of the rating period and the date of settlement."

As such, LEAP has decided to provide two separate Quarterly adjustments in the Statement of Adjustments as follows:- Quarterly / Days in quarter The Drainage charge that populates automatically in the Statement of Adjustments will be defaulted to Quarterly / Days in quarter and will be calculated on the following basis:-

Amount divided by the number of days in the respective quarter.

Quarterly / Annual basis If you choose the Quarterly / Annual basis the amount will be calculated:-

Amount multiplied by 4 divided by the number of days in the year.

Please see the attached: Statement of Adjustments Matter Guide  

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Blog Article: VIC - Statement of Adjustments - Quarterly adjustment