Collectors’ Corner

alternative tax collection scheme

No, not scam – Alternative tax collection scheme. Municipalities have various options to ultimately enforce property tax collection such as court action and tax sale. But during the current year we do all we can to offer taxpayers a variety of methods to voluntarily pay their taxes such as cash, cheque, electronic payment, monthly pre-authorized payments, etc. The home owner grant provision and property tax deferment option are also forms of payment. During the current year the Community Charter provides municipalities with two tax collection schemes - the General tax collection scheme and the Alternative municipal tax collection scheme. The General scheme is the default option in which the municipality follows the Province’s rules per S234 and Regulation 426/2003. Basically, property taxes are due on July 2 and a 10% penalty applies to all unpaid taxes after the due date. However, a municipality can choose an Alternative scheme of tax collection per S235 whereby a council may, by bylaw, establish one or more dates on which all or part of the property taxes are due. So a municipality can choose multiple due dates however the sum of the penalties must not exceed the sum total of 10%. For example, a municipality could choose a first due date of July 2 with a 5% penalty and then a second due date of August 2 with a 5% penalty.

Why would a municipality choose an Alternative tax collection scheme? Many municipalities have had multiple due dates which were originally established under the old Municipal Act. These bylaws are still valid even though the legislation has been amended. While changing to multiple due dates reduces overall penalty revenue that would otherwise be collected, it mitigates the punitive effect on the taxpayer of a one-time 10% penalty. If the taxpayer forgot to pay by the first due date, the penalty is effectively half of what it would otherwise be. Another reason for an Alternative scheme is to provide relief to those owners, particularly seniors, who may have paid their net property taxes by the due date but forgot to claim their home owner grant. An Alternative scheme would legally provide for claiming the home owner grant by the second due date without penalty. Interestingly, with the modernization of the property tax deferment program starting this year, an Alternative tax collection scheme may be worth considering as an option with regards to the penalty similar to and/or in conjunction with the home owner grant option. Otherwise there could be a lot of disgruntled taxpayers attending the municipal tax office.

Yes, beware of tax scams and also be aware of the Alternative tax collection scheme. HAPPY 2020 TAX TIME!!! •

DOUG STEIN Doug Stein has worked in municipal finance for over 30 years. In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich. Doug leads the Collectors’ Forum, is a GFOABC Life Member, and a CPA, CMA.