Mar 30

Were you aware of the new consolidated business tax proposal?

by Downtown Calgary · 0 comments

Consolidated business/property tax can affect your business

On March 20th, City of Calgary Administration brought forward a motion to the Priorities and Finance committee to consolidate the business tax and non-residential property tax, which was passed.  The objective is to streamline Calgary’s tax system, reduce the administrative burden on business and to improve economic competitiveness.

Currently the City of Calgary issues business tax invoices to all businesses and a separate non-residential property tax invoices to commercial property owners.  If you own both a building and a business you receive two invoices a year.   In the proposed system one tax invoice would be sent to property owners who would roll it down to their tenants.  Administration is proposing to phase it in over 7 years starting in 2013.

On paper this sounds like the right thing to do, but once you dig deeper, many questions arise.  At the end of the day,

“How will this affect your business?”

  1. The amount of tax to be transferred is in excess of $200 million, leading to an estimated increase of 29% for non-residential taxpayers.
  2. All properties will be taxed including vacant properties, vacant land and projects under construction.
  3. Businesses who do not own their own property would be relying on the property owner to pass along their portion of the consolidated tax and property managers are suggesting they would apply a handling fee of 15-20%.
  4. There is no clear process as to how businesses can appeal their business tax once consolidated.
  5. All Not-for-Profit organizations who currently pay property tax but were previously exempt from business tax will now be required to pay the business tax component, an estimated 29% increase.
  6. Some businesses will see their tax go up and some will see it go down, but no clear examples have been provided.
  7. The city has not provided a clear mitigation of risk to any of the issues presented by industry leaders, except the seven year phase-in to adapt.

It is the Calgary Downtown Association’s stance that without the appropriate abatement mechanism to protect non-residential property owners and businesses from increased tax costs, or little evidence that the proposed consolidation will improve economic competitiveness, we are strongly opposed to this proposed consolidation at this time.

Prior to this motion going to Council on April 9th, please consider calling the Tax and Assessment department to see how this consolidated business tax will impact you and your business. (photo credit)

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