Permissive & Revitalization Tax Exemption Procedures
Municipal permissive tax exemptions (including: partnering, heritage, riparian or other exemptions) and revitalization tax exemptions should only be undertaken through appropriate policies and procedures to ensure they are equitable, logical, and in alignment with broader municipal objectives.
Permissive & Revitalization Exemption Policy
Permissive tax exemptions are provided at the discretion of council. Revitalization tax exemptions are a specific type of permissive exemption designed to economically, socially, or environmentally revitalize a property or area of a municipality.
A municipality must include a statement of permissive tax exemption objectives and policies as part of its budget (five-year financial plan). This statement would set out the broad policy objects governing both current and future eligible permissive tax exemptions.
Once the exemption policies have been developed, the municipality must follow set procedures prior to annually adopting a permissive tax exemption bylaw (which must be adopted by October 31 in the year prior to the exemption coming into force).
In addition, the amount of forgone property taxes on each exempt property must be included in the municipality's annual report.
Permissive Exemption Public Notice
Prior to adopting an exemption bylaw, a municipal council must provide a public notice of the proposed bylaw, which must include the following information:
- A description of the properties subject to the bylaw
- A description of the proposed exemption
- The number of years the exemption will be provided
- An estimate of the amount of taxes that would be imposed on the property if it were not exempt (for the year in which the exemption is intended to take effect and the following two years)
Permissive Tax Exemption Bylaw Adoption
All permissive tax exemptions must be adopted by bylaw. To be adopted, most permissive tax exemption bylaws require is simple majority vote of council. However, bylaws exempting partnering, heritage, riparian, golf course, and cemetery exemptions must be adopted by at least two-thirds of all council members.
In addition to identifying the properties subject to the permissive tax exemption, an exemption bylaw must describe the extent of the exemption, the period of the exemption and, if applicable, any conditions to which the exemption is subject.
The exemption bylaw must be adopted before October 31 to be effective for the following taxation year. For example, if a bylaw is not adopted until after October 31, 2017, the properties listed in that bylaw will be taxable for the 2018 fiscal year, and will not be eligible for exemption until 2019.
Revitalization Tax Exemption Bylaw Adoption
The revitalization tax exemption process involves three distinct steps:
- Step 1: A revitalization tax exemption program for the municipality (or an area of the municipality)
- Step 2: An exemption agreement with a specific property owner who is eligible under the revitalization tax exemption frogram
- Step 3: An exemption certificate in relation to a signed exemption agreement.
Step 1: Revitalization Tax Exemption Program
Prior to providing a revitalization tax exemption to a potentially eligible property, a municipality must, by bylaw, establish a revitalization tax exemption program. A revitalization tax exemption program should be considered in conjunction with the municipality’s overall objectives and policies regarding permissive tax exemptions. A revitalization tax exemption program may vary for different:
- Areas or the municipality
- Property classes
- Activities or circumstance related to a property
- Property uses (as set out in zoning)
- Other differences established by bylaw
The Revitalization Tax Exemption Program must include a description of:
- The reasons for program
- The objectives of the program
- How the program is intended to accomplish the objectives
- The properties, activities, or circumstances that will be eligible for an exemption
- The extent and amount of the exemptions
- Maximum term (no longer than 10 years) of the exemptions
Prior to adoption, the municipal council must provide public notice of the revitalization tax exemption program, including:
- The reason for the program
- The objectives of the program
- How the program intends to accomplish the objectives
- The types of properties, activities, or circumstances that will be eligible for the exemption
- The extent, amount, and maximum term (not exceeding 10 years) of the exemption.
Step 2: Exemption Agreement
Once a revitalization tax exemption program bylaw is adopted and established, a property owner eligible for an exemption may enter into an exemption agreement with the municipal council respecting:
- The provision of the exemption
- Condition under which the exemption is to be provided, and
- Any requirements that must be met before an exemption certificate is issued by the municipality
Step 3: Exemption Certificate
Once the exemption agreement is signed, the final step is for the municipality to issue an exemption certificate, which must include the following for the specific property covered under the exemption agreement:
- The extent and amount of the tax exemption (which may be based on a formula)
- The term of the exemption (no longer than the maximum term set under the revitalization tax exemption program)
- If applicable, any condition on which the exemption is provided
- If the exemption certificate is cancelled, a determination of an amounts payable to the municipality.
An exemption certificate may only be cancelled at the request of the property owner or if the owner failed to meet any of the conditions specified in the exemption certificate.