June 23rd, 2018

Business Beat: Understanding your property assessment and tax rate

By Medicine Hat News on March 29, 2017.

Often the terms “assessment” and “taxation” are considered to be interchangeable. However, assessment and taxation are very different. Although one impacts the other, each is a distinct and independent process.

“Assessment” is the process of estimating a dollar value on a property for taxation purposes. This value is used to calculate the amount of taxes that will be charged to the owner of the property.

The assessment process is governed by the Provincial Municipal Government Act, however the application of the process is handled locally through the assessment department. “Taxation” is the process of applying a tax rate to a property’s assessed value to determine the taxes payable by the owner of that property and the rate is set each year by a local municipal council.

(Assessed Value x Tax Rate = Property Tax)

The market value based standard is used to determine the assessed values for the majority of properties in Alberta and is based on July 1st of the assessment year. Market value is the price a property might reasonably be expected to sell for if sold by a willing seller to a willing buyer after appropriate time and exposure in an open market.

Key characteristics of market value are:
It is the most probable price, not the highest, lowest, or average price.
It is expressed in terms of a dollar value.
It assumes a transaction between unrelated parties in the open market.
It assumes a willing buyer and a willing seller, with no advantage being taken by either party.
It recognizes the present use and potential use of the property.

There are three approaches to determine the market value based assessment of a property. The three approaches for market value based assessments are: the sales comparison approach; the cost approach; and the income approach. For non-residential properties, most municipalities will use the income approach to value for assessment purposes.

Locally, the City of Medicine Hat distributed assessment notices on February 28, 2017 and by legislation, property owners have 60 days from the assessment notice mailing date to review and discuss any concerns with the City’s Assessment Department with a deadline of May 1, 2017 to appeal any unresolved concerns. We encourage property owners to contact the Assessment Department prior to filing an appeal, as once an appeal is filed, the case can only be dealt with by the assessment review board and may not be adjusted or discussed by the assessor.  Additionally assessment notices cannot be disputed after the 60 day appeal period. By legislation, assessments also cannot be disputed through an appeal process if the property owner did not file their request for information form by the deadline of September 1, 2016.

So what are your next steps:
Make sure you have opened, read and understand your assessment notice. While it’s not your tax notice, it is equally important, as it has a direct correlation to the tax you will be paying.
If you have a concern, call the assessment department at 403.529.8114 or email them prior to the May 1st appeal deadline at assessment@medicinehat.ca.
If your concerns are not addressed and you have just cause to file an appeal, make sure you submit the proper documentation by the deadline of May 1, 2017. There is also more information online here: http://www.medicinehat.ca/index.aspx?page=304.  (Government » Departments » Finance » Assessment » Appealing Your Assessment )

City Council will be setting the annual tax rate on May 1st and through the budget information presented and approved by Council, we are anticipating an estimated increase of 3.5% and potentially the same increase for 2018. Knowing your assessment value and tax rate, helps in terms of budgeting for your business.

Tax notices will be mailed in May with tax payments due on June 30, 2017. If you have trouble paying your taxes, consider the monthly payment plan. You can apply for TIPP up to June 30 for the current year’s taxes.

Request for Information (RFI) forms will be due during the summer of 2017, similar to 2016. Make sure you submit your RFI form so that you don’t relinquish your ability to appeal. You can view the forms online on the City’s website http://www.medicinehat.ca/index.aspx?page=320 (Government » Departments » Finance » Assessment » Request for Information (RFI) )

The Chamber of Commerce has been actively involved in the Assessment and Taxation discussion since early 2013, having created three related policy positions which can be viewed on the advocacy page of our website (https://medicinehatchamber.com/pages/Advocacy). Our policy positions include the impact of increased non-residential property assessments, tax equity: narrowing the gap between residential and non-residential property taxes and enhancing municipal financial planning and tax equity. In addition, our Chamber of Commerce represents the

Alberta Chambers of Commerce on the provincial assessment and taxation stakeholder advisory committee and is involved in regular discussions related to the municipal government act and assessment and taxation regulations.

For more information on assessment, visit the City of Medicine Hat website: http://www.medicinehat.ca/index.aspx?page=278 . There is also additional information on assessment and taxation on the Government of Alberta Municipal Affairs website http://www.municipalaffairs.alberta.ca/1538.

Source: Guide to Property Assessment and Taxation in Alberta, Alberta Municipal Affairs

Lisa Kowalchuk is the executive director of the Medicine Hat & District Chamber of Commerce. For more information on this column or the Chamber, contact 403-527-5214.

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