All municipalities must adopt a property value tax bylaw each year. The tax bylaw must be adopted after the annual budget (financial plan). Based on the tax revenue requirements in the budget, the municipality will set its municipal tax rates to raise the appropriate revenue from the nine different classes of property.
Property Value Tax
Property value tax (also know as an ad valorem tax) is a tax applied the value of a land and improvements (buildings and other fixtures) and is the principal source of revenue for most municipalities in British Columbia.
During the annual budgeting process, municipalities will determine their service and infrastructure expenditures for the year and the revenue sources to fund these expenditures (including property value taxes).
Once a municipality has determined the total amount of proper value tax to raise, it must then determine how to apportion that tax burden over the nine property classes (for example, (Class 1) Residential Class, (Class 6) Business Class, and (Class 4) Major Industrial Class). A guiding principle for determining the apportionment would be the Statement of Objectives and Policies for Taxation required as part of the annual municipal budgeting process. Once the tax apportionment to each property class is determined, the municipality will then set a tax rate for each class sufficient to raise the necessary tax revenue to meet its annual budgetary needs.
Tax rates are expressed as a dollar figure per $1,000 dollars of assessed property value of land and improvements. For example, a tax rate of $1.02 per $1,000 of assessed value would mean that a property assessed at $300,000 would be taxed $306 (= $300,000 x $1.02/1000). The assessed values for every taxable property in B.C. is annually determined by BC Assessment.
Municipalities must set their tax rates for each property class, by bylaw, before May 15 of each year, and they must submit their tax bylaw to the Ministry of Municipal Affairs and Housing, which reviews and publishes annual tax rate and tax revenue information.
- Get municipal tax rates, tax burden and property assessments data
- Learn more about local government property assessment and classes
General Municipal Taxation
Municipalities generally have broad authority to set tax rates. While tax rates may not vary within a property class (all Residential (Class 1) properties are taxed at the same rate), tax rates may vary between different property classes (the Residential (Class 1) tax rate may vary from the Business (Class 6) tax rate). Setting different tax rates for different property classes is referred to as a variable rate taxation system.
Restrictions on Municipal Taxation
While municipalities have broad authority to set tax rates and ratios*, there are some specific restrictions on this authority:
- Utilities: Under section 199 of the Community Charter, Cabinet may prescribe regulations limiting the tax rates and/or ratio for each property class . This regulatory authority is currently used to set a maximum tax rate and ratio on Utility (Class 2) properties. The maximum tax rate that can be levied by any municipality on a Utility (Class 2) property is the greater of $40 per 1,000 or 2.5 times the Business (Class 6) property tax rate.
- Ports: Marine port property is a sub‐category of Major Industry (Class 4). In 2003, the B.C. government set a cap on municipal property taxes levied on port terminals. Under the Ports Property Tax Act, the cap is set at $27.50 per 1,000 on existing land and improvements and $22.50 per 1,000 on new investment.
- New municipalities or boundary extension: Incorporation of new municipalities or boundary extensions to existing municipalities are done through letters patent. In some cases, the letters patent will restrict the tax rate a municipality can levy on a specific property or class of property. Usually, the restricted rate is based on the rural area tax rate levied under the Taxation (Rural Area) Act.
* Note: a "ratio" is the tax rate relationship between two property classes—for example, if the Business (Class 6) tax rate is $2.00/1000 and the Residential (Class 1) tax rate is $1.00/1000, then the Business Ratio is 2:1).
Tax Due Date & Penalty for Late Payment
Municipalities must send all property owners their tax notices well in advance of the tax due date. At a minimum, the notice must include the:
- Assessed value of the property
- Property value tax rate for that property (for both the municipality and other public authorities like School Tax and Hospital Tax)
- Total tax amount due
- Due date for payment
- Penalty for late payment.
Under the default municipal tax collection scheme, property taxes are due on July 2 each year. Any unpaid tax, including an unclaimed home owner grant, is subject to penalty after July 2. A municipality may opt for an alternative tax collection scheme (under S.235 of the Community Charter), which allows for changing the due date and/or penalty.
The penalty rate is established in the Municipal Tax Regulation and is currently 10 percent. There is no provision to appeal the penalty, however, municipal councils may wish to grant relief under extraordinary circumstances such as city hall strikes or other events that disrupt normal municipal operation, such as natural disasters. This can only be done through a write-off of taxes.