The DMA Way

Alberta Legislation Update

by DMA Staff | Feb 17, 2017

As we have previously reported, there are a number of changes that are currently taking place related to Alberta Property Tax legislation.
The most significant changes in Alberta relate to the Municipal Government Act we previously reported on. The amended Municipal Government Act itself has been approved while the associated Regulations have not yet been approved. The real changes to the day to day aspect of assessment will be in the Regulations which are now projected to be released in March 2017 and will have a 60 day review period. They will then be passed in the fall with any changes and most will be effective for 2018 tax.
Some of the more important Regulations as it relates to Property Tax are the Construction Cost Reporting Guide (‘CCRG’) used to report assessable construction costs for industrial properties, the Matters Relating to Assessment & Taxation (‘MRAT’) used for valuation standards, and the Matters Related to Assessment Complaints (‘MRAC’) which speaks to the appeal processes and evidence exchanges.
The changes in the Municipal Government Act we previously reported on include the following:

Regulated Classification         2015       2016                    
Wells 1.377  1.175  -14.67% 
Pipelines 1.071  .971  -9.34% 
Electric Power Systems 1.422  1.406 -1.13% 
Telecommunication Carriers 1.15  1.139  -.96% 
Cable Distribution 1.361  1.375  1.03% 
Machinery & Equipment 1.38  1.38  0.00% 
Railway 1.36   1.36 -1.47% 

  • Centralization of Industrial Assessments – Industrial properties will be considered Designated Industrial Properties. This means the assessment will be handled by the Province going forward, although they may use contract or existing assessors in a 3 year transition.
  • Condition Date Change – The state and condition date the property is assessed as of will change from December 31st in the year prior to the tax year, to October 31st. This will coincide with the deadline for linear property.This will take effect for 2019 taxes
  • Supplementary Assessments – The Province will be preparing assessments for property the date they are completed. This will mean new additions will be assessed and taxed (if the municipality chooses) the month they are put into operation rather than on an annual cycle.The municipality still has the option to tax them or not.
  • Subclasses for Property – still yet to be totally defined, municipalities will have the option to create subclasses under residential and non-residential property. This is similar to BC, where these assessment classes will have different tax rates depending on where the municipality wants to focus their taxing efforts.
  • Tax Rate Ratio Caps – The Province has introduced a projected ratio cap of 5:1.This means that any class of property created under the sub-classes cannot be more than 5 times the amount of the lower rate class. Currently the Alberta average between the lowest and highest caps by municipality are about 3.2:1 so there is significant room for increase, especially when considering sub classes.

For 2017, we shouldn’t expect these changes to have an impact excepting assessors preparing their assessments for transition. This may include the removal of previously applied allowances to assessments if the assessor is not able to justify those to the Province.

Typically, we would forecast a 2% increase to property taxes annually. This year, the assessment year modifiers for some property types, specifically wells and pipelines dropped significantly. We expect municipalities to try and make up for that shortfall and as such, other non-residential properties such as machinery & equipment may see some significant increases to the property tax rates. Every municipality is different though, and set budgets based on their individual sending needs.
Please do not hesitate to contact your local DMA office should you have specific questions or requests.