How to Make Exempt Properties Taxable
By Michael E. Swanberg
Reynolds Mirth Richards Farmer LLP
AMSC Casual Legal Service Provider
Under the Municipal Government Act (MGA), and its associated regulation, the Community Organization Property Tax Exemption Regulation (COPTER), certain types of properties are automatically exempt from paying property taxes. For example, a property held by a religious body and used chiefly for divine service, public worship or religious education is automatically exempt from paying property taxes under section 362(1)(k) of the MGA. Other exemptions require the property owner to apply for an exemption before it takes effect. For example, under section 15(d) of COPTER, non-profit organizations which operate licensed child care facilities may apply for an exemption from taxation.
Under sections 362(2) and 363 of the MGA, municipalities can pass bylaws to make certain types of exempt properties taxable, including property that is held by a non-profit organization and used for a charitable or benevolent purpose that is for the benefit of the general public, property that is held by and used in connection with the activities of agricultural societies and community associations, and some other types of exempt property defined in COPTER. Note that not all exempt properties can be made taxable under sections 362(2) and 363.
If a municipality wishes to pass a bylaw to make certain types of exempt properties taxable, the municipality has discretion to determine the extent to which those properties will be liable to pay taxes. For example, the municipality could require the properties to only pay 50% of the general property taxes that would otherwise be assessed.
If a municipality wishes to pass a bylaw to make certain exempt properties taxable, there are some important requirements and limitations that must be considered:
- A council proposing to pass such a bylaw must notify any person or group that will be affected by it in advance of passing it; and
- If such a bylaw is passed, it cannot come into effect until one year has passed.
Municipalities cannot single out certain properties in a specified class to pay taxes, and allow other properties within that same class to remain exempt. For example, if a municipality wished to make non-profit childcare facilities taxable, this would apply to all properties that fall within that class – the municipality cannot single out certain non-profit child care operators for special treatment.
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DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.