Drainage Charge in Rating

What is drainage rate in Local Government Act, 1976?

A.

Drainage Rate is provided by the Local Government Act Section 132 at maximum of 5% of the Annual Value or 1% of the Improved Value.

E.g. the total expense of irrigation is RM500,000, the Improved Value for the land is RM1.5 mio. If drainage rate is calculated at 1% of the Improved Value, ie RM1,500,000, that is RM15,000.

The same piece of land when is rented may fetch rental at RM5,000 per month. So, annual rental return of RM60,000. If drainage rate is calculated from the Annual Value, 5% is used.

5% x RM60,000 = RM3,000.

This calculation is still less than rate calculated from Improved Value.

Ref:

Own account
Image from: JPPH Website from: http://www.jpph.gov.my/mobile/pdf/Rating.pdf