Local Government Grants-in-Lieu of Taxes

A grant‐in‐lieu of taxes is similar to a property value tax and is collected from property owned by or vested in the provincial and federal governments and their associated agencies and Crown corporations that are exempt from property taxation under the Constitution Act.

Grants-in-Lieu of Property Tax

A grant‐in‐lieu of taxes is similar to a property value tax and is collected from provincial and federal governments and their associated agencies and Crown corporations (for example, courthouses, provincial and federal government office buildings and ambulance stations).

Since senior governments are exempt from property taxation under section 125 of the Constitution Act, they pay annual grants instead of property value taxes; however, the methodology for determining the payment is quite similar.

Grants-in-lieu of property taxes are paid annually to local governments for services provided to provincial and federal government properties, such as sewers, roads and fire protection. The amount of the grant-in-lieu of taxes is determined under the Municipal Aid Act for the B.C.government and the Payment in Lieu of Taxes Act for the federal government.

Because schools and hospitals are specifically exempt from paying municipal property taxes under statute, a grant-in-lieu is not payable on these properties. In addition, highways, forests, parks or land under the control, management or administration of a Crown corporation are also excluded from paying grants under the Municipal Aid Act, though there are specific payment provisions for certain Crown Corporations such as BC Hydro.

BC Hydro Payments in Lieu of Taxes for Regional Districts

BC Hydro is exempt from all property taxes other than those levied to schools. To compensate local governments for the loss of this taxation revenue, BC Hydro pays grants to regional districts when there are generating facilities located within their electoral boundaries.