Collectors’ Corner

is it time to review your pte policy?

Sections 224 and 225 of the Community Charter provides the authority for municipalities to grant a property tax exemption (PTE) to certain qualifying properties. The issue of PTE, while having legislative constraints, is very complex with many, sometimes conflicting, factors to consider. A PTE policy ensures that the intent of the legislation continues to be met and demonstrates a responsible approach that takes into consideration current societal issues and concerns. The key principles of a PTE policy are accountability, reasonableness, equity, fairness, inclusiveness and accessibility. Exemptions can be granted in whole or in part on the taxable assessed value of the land, improvements or both. Exemption categories (sport, cultural, community service, agricultural, etc.) can be established with a corresponding maximum exemption amount (50%, 75%, 100%, etc.) applied to each category. The complexity of a PTE policy should be balanced with the available staff resources required to efficiently administer it. Besides conforming to the other municipal policies, the PTE policy should not conflict with other government comparative policies such as BC Assessment and Canada Revenue Agency.

Public Benefits Test: In addition to being a charitable or nonprofit organization, the activities of the organization must result in a benefit to the public, or a sufficient section of it. A public benefit is presumed to exist where an organization’s purposes are for relief of poverty, advancement of education, or advancement of religion, the provision of health care or relief for the aged. Certain factors would disqualify an organization from meeting the public benefits test, such as, the organization operates its facility as if a private club or there is commercial activity on the property.

The Accessibility Test: Are the services and programs/activities of the organization equally available to all residents of the municipality, without discrimination? This factor must be applied in a reasonable and fair manner. Are the facilities accessible and the services/programs inclusive to the public? Is anyone invited to attend/participate, not just a group within the organization or specific persons attending at the property? Other factors to consider are (but not limited to): • Exemptions are based on the principal use of the property, not on the charitable service of the organization as a whole; • The organization supports and furthers Council’s objectives; • The organization is required to publicly acknowledge the exemption; • Registration of a covenant restricting use of the property; • An agreement committing the organization to continue a specific service or program; • An agreement committing the organization to have field/facilities open for public use for specific times or a total amount of time; • An agreement committing the organization to contribute to the municipality an amount equal to the amount of property taxes that would otherwise have been payable to the municipality in the event that the property ceases to be eligible for the tax exemption at any time during the taxation year; • The services and activities of the organization are consistent with the Canadian Charter of Rights and Freedoms.

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.