Should Homebuilders Be Paying Additional School Tax?

This is an extra tax imposed by the NDP on wealth. Unfortunately, Homebuilders have been caught in the web. Was it really the intent of the government to increase the cost of housing by making homebuilders pay extra tax for 2-4 years during the pre-construction phase? The following explains the status of and reasons for current Appeals to the Assessment Appeal Board or just skip to the conclusion.

Who pays the tax?

The School Tax Act states that an owner of “dwelling property” must, for a taxation year, pay school tax in addition to regular school tax as follows:
  • The tax rate will increase by 2 on values between $3-$4M
  • The tax rate will increase by 4 on values over $4M

“Dwelling Property” means the following class 1 property (as per clause 117.1 of the School Act):
  1. Land that is outside the agricultural land reserve and that is determined by the assessor to have no present use.

The question under debate is the definition of “no present use.” Our contention is that a property bought by a developer or potentially by an entity that proposes to develop, has use, provided the development process is continuous.

There is no precise definition of “No present use.” There have been cases that hint at what that definition might be.

Speculation Tax

We note that the BC government simultaneously created a “speculation” tax which excluded vacant land if “building activity” had started. This included:
  • applying for financing;
  • applying for a permit or other necessary approval;
  • entering into contracts for designing, building or engineering;
  • demolishing or removing existing improvements;
  • clearing or excavating the site;
  • constructing or placing the residence on the residential property or substantially renovating the residence;
  • any other activity necessary for the construction, placement or substantial renovation of the residence;

Existing Decisions

BC Assessment says that the Intracorp Case (2000 BCCA 121- Stated Case 416) defines what would qualify as the definition of “no present use.” The issue in that case was the definition of “used for residential purposes.” It was concluded that construction was the trigger point.

At the other end of the spectrum, it was held that “holding property for residential use did not qualify as being used.”

The author of the Intracorp decision (Court of Appeal) was drawn to another case (referred to as Bosa 2, Supreme Court) in which the dissenting judge suggested “commitment to residential use” was relevant.

“The question then is at what stage of the project can it be said, with confidence, that the commitment to follow through with development of the land for residential purposes has been proven.”

Based upon the last definition, it is logical to suggest that a parcel which is zoned residential, where some of the items listed above have commenced, there is a commitment, and therefore, a use.


BC Assessment have suggested that if a property is being “used” then it is a business and should be designated class 6.

The consequences in theory would be that any property under development is commercial. That could add millions of dollars to the cost of housing.

Is this really what the politicians want? It is unlikely that this would occur.


There is a case pending before the Property Assessment Appeal Board due to be heard in April 2021. It should provide some guidance but perhaps the government should be re-evaluating this?

If you have a site in the preconstruction stage, zoned Residential and classed 01, then you might want to consider appealing or writing to your MLA.