Commercial and residential property taxes are by far the largest source of revenue for Canadian municipalities – about one third of the budgets in large cities. Other revenue streams include provincial grants and licenses, permits and user fees.
Residential accommodation is taxed on market-based values. Municipal assessors annually determine and issue an assessment for each property. The mill rate (based on “mills”) is the amount of tax payable per $1,000 of the assessed value of a property. The higher the assessment, the higher one’s annual tax bill will be. Therefore, municipalities have an appeal procedure for the property tax assessment.
This article studies the residential property assessment and appeal processes in Calgary and Vancouver.
Assessment Process in Calgary
The City of Calgary Assessment Unit handles residential property assessments. Alberta’s Municipal Government Act governs assessment protocols. Assessments are based upon the property’s estimated market value on July 1st of the previous year. Most residential properties are assessed with the sales comparison model. In other words, people on the same street whose houses are about the same size, age and value will be assessed at about the same value for tax purposes. If a representative house in the neighbourhood has sold in the previous year, that selling price will become the new baseline value for that neighbourhood with similar properties.
By contrast, commercial properties are assessed on the income they generate or a cost approach that recognizes the land value plus depreciated replacement cost for improvements.
Calgary conducts a mass appraisal that evaluates location, structure type, size of the structure and lot, as well as any influencing factors such as a view, proximity to green spaces and traffic. Once total property tax is billed and collected, Calgary remits about 40% to the provincial government.
Assessment Process in Vancouver
The provincial BC Assessment organization assesses all properties in Vancouver (and all of B.C.) pursuant to B.C.’s Assessment Act which outlines the rules and procedures. Appraisers collect information typically following construction but at other times too, such as after a renovation. The organization analyses property sales for provincial and local housing markets to obtain an up-to-date understanding of property markets for a reference date (also July 1st of each year). BC Assessment then creates and distributes assessment notices to property owners by December 31st each year. This information is passed on to municipalities which impose and collect residential property tax according to their annual budgets.
Homeowners can appeal their assessment, but not the tax rate they pay or the level of services their municipality provides. If homeowners choose to appeal, they must pay a modest appeal fee of about $30 in both cities, which is refundable if the assessment is lowered. Both agencies recommend paying the assessed property tax by the deadline to avoid late penalties. All adjustment credits will be reimbursed after the appeal process.
Appeals in Calgary
After assessment notices are mailed to homeowners, a 60-day Customer Review Period (CRP) begins during which homeowners should review their assessments and determine whether there is an error with the assessment. Homeowners should contact Calgary Assessment to discuss and negotiate an adjustment if one can be justified.
… municipalities have an appeal procedure for the property tax assessment.Homeowners dissatisfied with their assessment must file formal complaints by the end of the 60-day CRP. Once the CRP ends, the appeal period is closed and the city will calculate the taxes owed by each homeowner and mail out the tax bills.
To appeal, the first step is to file a complaint with the Calgary Assessment Review Board (ARB) within the 60-day CRP. City Council appoints qualified residents to serve on the roster of the ARB. The ARB sits in panels of three members, one of whom is the chair. A Local Assessment Review Board (LARB) hears appeals of residential property tax assessments. More complex commercial appeals come before Composite Assessment Review Boards (CARB). The CARB process was the subject of a recent LawNow article.
Complaints must clearly outline why they claim the assessment is incorrect. The ARB will only hear matters listed in the complaint and nothing else. The ARB will decide based on the written evidence submitted, though complainants should attend hearings to substantiate their claim and add to their evidence. The onus of proof rests with the complainant.
The ARB must provide a written, reasoned decision within 30 days of the hearing. The ARB can reduce or confirm the assessment. Either party may appeal to the Court of Queen’s Bench for judicial review within 60 days of receiving the ARB decision. These appeals must be on a question of law, whether an error was committed in the preceding level of appeal, or on a matter of jurisdiction.
Appeals in Vancouver
The Property Assessment Review Panel (PARP) hears appeals in Vancouver. Homeowners must file appeals by January 31st of the assessment year, allowing them about one month to decide whether to appeal. Panels are independent from BC Assessment. The Minister of Municipal Affairs and Housing appoints members to the Panels. Again, the burden of proof rests with the homeowner making the appeal, who must provide evidence of why the assessment is incorrect. The Panel is not required to provide written reasons for its decision but will provide an oral explanation.
Canadian homeowners should understand assessment and appeal processes to ensure they are paying a fair level of property tax.The second level of appeal is to the Property Assessment Appeal Board (PAAB), which only hears cases that the PARP already reviewed. The Assessment Act also governs this board, which is independent from BC Assessment, the PARP, and the provincial government. PARP does not forward evidence it reviewed to the PAAB. The complainant must resubmit the evidence they are relying on.
Even after a PARP hearing, settlement resolution is still possible. Before the appeal is heard, the appellant and BC Assessment must attempt to resolve the appeal and the assessment. If they cannot do so, the PAAB will schedule a telephone conference for an appeal management conference between the homeowner, BC Assessment and the Board’s appeal manager. In this conference, the PAAB determines whether the complaint can be resolved through settlement and offers a non-binding opinion to assist in the settlement process. If settlement is not possible, the manager provides a date for the parties to deliver written submissions for appeal to the PAAB.
Written submissions, including the BC Assessment appraisal report, are exchanged. Homeowners can submit a written rebuttal, although they cannot introduce new evidence or repeat information from their written submission. The Board then considers the submissions and issues a written decision. The PAAB can order BC Assessment to adjust the assessment.
Homeowners can appeal the PAAB decision to the province’s Supreme Court only on a question of law within 21 days of receiving the PAAB decision. The Board will forward evidence to the Court; the complainant cannot submit new evidence. The Supreme Court can order the unsuccessful party to pay the other party’s appeal costs.
The 60-day Customer Review Period in Calgary allows ample time for homeowners to address concerns directly with the assessment of their property and informally negotiate an adjustment. As a result, only about 0.2% of homeowners appeal their assessment. In 2018 there were 7,386 residential property appeals of which:
- 2,002 were resolved without a hearing;
- 2,622 had no change;
- 2,473 had their assessment reduced;
- 65 were revised by mutual consent;
- 215 were dismissed;
- 5 were adjusted through Board decision; and
- 4 had their assessment increased.
Only 7 cases were elevated to the Court of Queen’s Bench.
Residential accommodation is taxed on market-based values.Despite this efficient review process, the number of residential appeals has risen since 2017. LARB hearings rose from 821 in 2017 to 977 in 2019. During this same period, the number of applications for judicial review to the Court of Queen’s Bench dropped from 199 in 2017 to 5 in 2019. This may reflect the economic downturn in Calgary, where homeowners are weary of higher taxes but also wary of the formalities of a Queen’s Bench review.
In 2018, 1.3% of approximately 2.044 million B.C. property owners across the province submitted formal complaints. The Vancouver property market volatility in recent years and imposition of the provincial school tax levy on properties valued above $3 million resulted in a spike in the number of appeals. Then a market slump in 2019 saw appeals dropping by 66%.
Forcing parties to address settlement prior to PAAB arbitration is a positive note for Vancouver. This resolved 92% of pending appeals which did away with the need for a hearing in the years 2016 through 2018.
These two jurisdictions reflect municipal and provincial responsibility for property assessment. Both approaches conduct fair, transparent reviews to ensure equitable taxation. The mandate in both cities for resolution before hearings (albeit a more structured one in British Columbia) may become a more common feature of the appeal processes because of its proven success for resolution as well as cost and time saving benefits.
Canadian homeowners should understand assessment and appeal processes to ensure they are paying a fair level of property tax. Vancouver and Calgary provide useful examples of different approaches to the challenge of municipal property tax assessment.