Local government permissive tax exemptions
Local governments have the authority to exempt eligible properties from property taxation for a specified period of time. Such exemptions must be provided by bylaw. Permissive exemptions are different to statutory exemptions, which are automatic and therefore not at the discretion of a local council or board.
General exemption authority
A permissive tax exemption may be provided to an eligible property by bylaw at the discretion of a municipal council, and in some cases, a regional district board. Local governments may provide such exemptions for periods of up to 10 years.
Eligible properties may include:
- Property owned or held by a charitable, philanthropic, and non-profit corporation and used for the purposes of the corporation
- Property owned by a local authority and used for the purposes of that local authority (e.g. property owned by Municipality X but located within the boundaries of Municipality Y)
- Properties owned or held by a public authority that is not statutorily exempt from taxes
- Properties occupied by a public authority or non-profit organization but owned by a different public authority
- Properties owned by a person (including a business, society or corporation) providing a partnering agreement, but only in relation to the provision of the agreement.
Some examples of properties generally eligible for permissive tax exemptions include:
- Public parks owned and held by an athletic or service club
- Art galleries or museums owned by a charitable or philanthropic organization
- Not-for-profit seniors and community housing
- property located around a place of public worship but not eligible for a statutory exemption
The authority to grant permissive exemptions allows municipalities and regional districts to promote or achieve goals, such as:
- Encouraging certain development that are deemed to benefit the community, such as athletic clubs, that will make their fields and facilities available to the general public
- Supporting non-profit groups that provide services to the community that help meet municipal council’s objectives such as a non-profit organization that offers programs for at-risk youth
- Supporting heritage properties if conservation has been identified as important to the community's character
- Attracting new residents and businesses and encouraging economic development
- Supporting riparian properties that help meet municipal conservation and environmental goals
- Providing additional exemptions to statutory tax-exempted properties, such as places of worship, to include the ancillary lands surrounding the exempted properties
Municipal revitalization project tax exemptions
Municipal councils have authority to exempt land and improvements from the municipal portion of property value taxes in order to encourage various types of economic, social or environmental revitalization within a community.
Municipal tax exemption policies
All municipalities are required to develop overarching objectives and policies within their five-year financial plans in relation to the use of permissive tax exemptions. Revitalization exemptions must be considered in conjunction with these overall objectives and policies.
Specific permissive exemption policy
Municipalities have considerable flexibility in designing exemptions to meet particular circumstances, this includes the option of providing exemptions to all or part of an eligible property.
Municipal councils should adopt policies regarding tax exemptions (such as what types of properties council is prepared to exempt, for how long, and under what circumstances). These policies should build on the overall permissive exemption objectives required under the municipality’s annual budgeting process (i.e. financial plan).
Permissive exemptions may be offered for a single year, or for multiple years as specified in an exemption bylaw (not exceeding 10 years). Exemption bylaws may specify conditions under which the exemption will be granted. In order to have an exemption in place for the upcoming fiscal year, a local government must have its permissive exemption bylaw adopted and in force by October 31 of the previous year. A copy of the exemption bylaw is provided to BC Assessment, that codes the exemptions into the annual property assessment rolls.
Learn more about procedures for adopting policies on permissive and revitalization tax exemptions:
If a municipality or regional district intends to have property owners apply for permissive exemptions, a specific exemption policy could include instructions on how, when and what is required for an application.
Alternatively, local governments may take a more proactive approach and identify eligible properties for consideration in the exemption policy. A proactive approach to exemptions may also help the local government to meet specific community goals.
For revitalization tax exemptions, instructions on how, when and what is required to meet eligibility for an exemption would be set-out under a revitalization tax exemption program bylaw.
Once criteria have been established for permissive tax exemptions, local governments may estimate the number of properties eligible for exemption and the amount of forgone municipal taxes. This analysis would help the local government determine the acceptable scope of exemptions, within the given budgetary restraints of the local government.
Local governments may choose to limit the scope of exemptions by ranking them in order of priority based on established criteria. They could also elect to cap the total amount of tax revenue they are willing to forego in any one year through permissive exemptions.