Additional School Tax Exemption for DevelopersA property under construction is generally exempt from Additional School Tax (AST), HOWEVER land in the development phase prior to construction is TAXED as BC Assessment state that it has “no use.”
Additional School Tax is paid on “dwelling property” as defined under Section 117.1 (1) of the School Act, amended in 2018 which clause includes land having no present use.
Does land going through the development process have “no use?” This concept was challenged at the Appeal Board (2021 PAAB BC 2021-0032), known as the Musqueam case.
BCA argued that many Court Cases had concluded that for determining “classification,” actual construction must have commenced for use to change. Thus the definition under the School Tax would be the same.
The Board considered that the interpretation in the School Tax Act of “land having no present use” is different, determining that, in principle, development sites were exempt.
The reasoning was as follows:
1. The School Act is a different act than the Assessment Act.
2. It is designed to raise revenue for school boards.
3. It must be interpreted separately as intended by Parliament.
4. Had the Government meant it to be as per the Assessment Act, it would have referenced that Act.
5. The objectives of AST were to:
- Exempt rental properties.
- Encourage owners to develop.
- Discourage land bankers.
- Bring stability to the market.
1. Rental use.
2. Significant steps taken in the process of development such as:
- Development/construction agreements in place.
- Rezoning application made.
- Financing in place.
- Soft costs incurred.
- Offsite costs incurred.
- Site clearance.
- Property fenced.
- DP application made.
4. Phase I of a development needed to be completed before Phase II started.
We await BC Assessment’s interpretation of the ruling and their requirements of what is needed to qualify for exemption.
Please contact us if you have any concerns about how this decision affects your property now and in the future.
Peter Austin, BSc., AACI., C.Arb.
- Developers need to Appeal the Additional School Tax (AST)
- Expected Assessed Value Changes In 2022
- 2022 Property Assessment Value Changes
- Misconceptions within the Property Assessment Process
- Additional School Tax Exemption for Developers
- Minimizing Property Tax on Development Land
- Why Such An Increase 2021 Industrial Property Taxes?
- Burnaby Industrial Properties Appear to be Over-Assessed
- Have BC Assessment Over-assessed Retail Spaces
- 2021 Property Assessment Value Changes
- Assessment Of Residential Sites Under Construction
- Should Homebuilders Be Paying Additional School Tax?
- City of Vancouver Land Averaging 2020
- Government Assistance: Property Tax
- 2020 Assessment of Apartment Properties
- Development Sites: Is The Additional School Tax Applicable?
- 2020 Property Assessment Value Changes
- BC Lower Mainland Market Update 2020
- Taxes Affecting Real Estate In 2019
- Development of Sites Under Construction - 2020
- Land Averaging For 2019 Property Tax In Vancouver
- 2019 Property Assessment Value Changes
- Understanding B.C.'s Proportional Representation Referendum (PPTX)
- Amacon Update
- Vancouver Vacancy Tax
- 2018 Property Assessment Value Changes
- Mayor's Council Proposal for Funding Transit
- Resolving Disputes - A New Approach
- Mixed Use Properties - Potential reclassification for Property Taxation
- Classification of Mixed Use Properties September 2016 Update
- Possible Effects of FIT on Assessments
- BC Foreign Investors Tax
- NAIOP Industrial Panel
- Classification of Mixed Use Sites - Part 2
- Opportunities for Brokers
- Valuation of Properties Under Construction
- Is Assessed Value Equal to Market Value?
- Civil Resolution Tribunal Update - October 2014
- Assessment Appeal Board Changes Classification for Mixed Use Development Sites
- Strata Civil Resolution Tribunal Update
- Reviewing Appraisals - Download
- Resolving a Rental Dispute
- How are School Taxes Calculated? | doc