The State Government has taken legal action against 22 councils after an audit found they had illegally levied more than $27 million in rates on 10,000 properties this year.
In an extraordinary move, Local Government Minister John Castrilli began proceedings in the State Administrative Tribunal in April to have the invalid rates and service charges quashed.
A spokesman for Mr Castrilli said yesterday the councils had failed to obtain ministerial approval before setting differential rates or minimum rates in their 2011-12 budgets, which was required under the Local Government Act.
An estimated 10,380 properties and $27.19 million in rates are involved.
In most cases, even if the SAT action is successful, the councils can impose the same rates after re-adopting their budgets with the relevant approval.
The spokesman said $475,000, spread between 19 of the 22 councils, would likely have to be repaid to ratepayers because it was levied illegally and unlikely to be remedied.
One large metropolitan council made up $349,000 of this amount, though he would not say which one.
For the other 18 councils, the rates refund could range from $1000 to $35,000.
In September, Mr Castrilli told Parliament that checks of 79 budgets for 2011-12 had found 16 councils had incorrectly imposed rates and charges and the issue could largely be fixed via a Governor's Order.
The department said yesterday that further monitoring resulted in 22 councils being taken to the SAT - the only legal avenue available. An application against another council was under consideration.
Six city councils are involved: Kwinana, Belmont, Gosnells, Rockingham, Kalamunda and Cockburn.
The remaining 16 country councils include Albany, Bunbury, Murray, Chapman Valley, Exmouth, Carnarvon and Murchison.
The spokesman said the breaches were "concerning".
Asked whether the issue extended to past budgets, he said the tribunal matter only involved rates that were incorrectly levied in 2011-12.
The spokesman said councils should notify any ratepayers incorrectly charged rates.
The matter will be back before the tribunal on Monday.