Municipal Taxation 101Dean Hammond, City TreasurerNovember 14, 2011
There are three Drivers of the       Taxes You Pay…• Assessed Values• Property Class & Portioning• Mill Rates
Assessed Values•   Are determined by the Province•   Occur every two years•   Values generally go up, but can go down•   V...
Why use Assessed Values?• Equity• Fairness• Ratepayer Understanding
How have Assessed Values    changed for 2012?• Provincial increase – 13%• Municipal increase – 14%• Mix of increased value...
Property Classes & Portioning• The Province has 10 property classes• A property’s class determines the  portioning applied...
Residential ExampleLand                             $ 75,000Buildings                        $125,000Total                ...
Residential ExampleLand                             $ 75,000Buildings                        $125,000Total                ...
Mill Rates• Are determined by the Municipality• Takes the costs of running the City and  spreads those costs across the po...
Commercial ExampleLand                                 $200,000Buildings                            $300,000Total         ...
For More Information…              City Website• “Taxes and Assessment”• “Property and Assessment Search”• “Board of Revis...
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How Taxation Works

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  • I am here tonight in response to a prior inquiry from Councillor Montague regarding the differentproperty classes and how they affect taxation.However, given that we are going into budget season, I though it would be prudent to give a larger overview of how your municipal taxes come to be and how they are calculated.
  • Tonight I will show you how these all come together to determine your tax bill.
  • Every property in the Province in now assessed every two years (used to be every four).The 2012 assessment reflects values as of April 2010 (assessments are always two years behind).You will receive a reassessment notice every time your property is reassessed.The Province uses market value assessment because it is widely considered to be the fairest system of distributing the property tax burden.Assessments based on market value are easy to understand because, a) taxpayers relate well to the assessed value of their property b)assessors and taxpayers can readily check assessments by making comparisons with recent sales and assessments of similar properties in the neighborhood.Three approaches to determining valueDirect comparisonCost to replaceIncome approach (for businesses)
  • Three principles of assessment:Equity – Taxation is applied to the “pool” of all properties, therefore it is important that your property is assessed fairly so that it can be compared to the overall pool.Fairness – assessed values are for the most part a universally understood means of applying tax to the ratepayers.Understanding – property owners generally understand market values and therefore the assessment process should be easy to grasp.The acid test for fair assessment – “If the assessed value of your property is approximately the same as what you think you could sell it for, then you are probably assessed fairly”
  • All other things being equal, a reassessment may make your taxes go up or down depending on how the relative value of your property compares with the total pool of all other properties.Assessment values are just a means of distributing taxes among property owners. Remember there are three drivers of taxes, assessments are only one piece.
  • There are 10 different property classes, but in Brandon the majority of all properties fall into either the residential or commercial class.Portioning is means of allocating taxes among the various classes, the portioning rates are determined by the Province.People often inquire about condos, co-operative housing, and multi-unit complexes; they all fall under the “Residential” class and are therefore portioned the same at 45%Residential – 45%Residential 1 - <5 unitsResidential - >5 unitsResidential – owner occupied condos and co-operative housingFarm – 25%Other (Commercial) – 65%Institutional – 65%Pipeline – 50%Railway – 25%Designated recreational property – 10%Designated higher education property – 0%
  • So how do assessed values, portioning, and mill rates all come together to determine your taxes?
  • Note that the Municipal portion of this tax bill is only about 55% of the gross municipal and SD taxes. I say gross taxes, because unless the residence is your principal property, you do not get the home owner grant.Also note that the $1,797 in Municipal taxes that this home owner pays would be double if it were not for federal and provincial transfer payments, grants, and/or the many revenue streams that the City is able to generate.
  • Generally as assessed values go up, mill rates go down. Reiterate, an increase in your assessed value doesn’t necessarily mean an increase in your taxes.Definition of mill rate
  • Note the portioning is higher at 65% and that commercial pays an additional Provincial Education LevyIn this case the Municipal portion of the total tax bill is only 41%
  • How Taxation Works

    1. 1. Municipal Taxation 101Dean Hammond, City TreasurerNovember 14, 2011
    2. 2. There are three Drivers of the Taxes You Pay…• Assessed Values• Property Class & Portioning• Mill Rates
    3. 3. Assessed Values• Are determined by the Province• Occur every two years• Values generally go up, but can go down• Values are based on market values – Sales of simillar properties – Assessment criteria, size, age, renovations, other buildings, etc.
    4. 4. Why use Assessed Values?• Equity• Fairness• Ratepayer Understanding
    5. 5. How have Assessed Values changed for 2012?• Provincial increase – 13%• Municipal increase – 14%• Mix of increased values and new properties• Myth – an increase in assessment means an increase in taxes
    6. 6. Property Classes & Portioning• The Province has 10 property classes• A property’s class determines the portioning applied to the assessed value• Two main categories • Residential – 45% • Commercial – 65%
    7. 7. Residential ExampleLand $ 75,000Buildings $125,000Total $200,000Portioning (45%) $ 90,000Municipal Mill Rate (19.969) $ 1,797School Div. Mill Rate (16.274) $ 1,465Less: Home Owner Grant $ (700)Total Taxes $ 2,562
    8. 8. Residential ExampleLand $ 75,000Buildings $125,000Total $200,000Portioning (45%) $ 90,000Municipal Mill Rate (19.969) $ 1,797 55%School Div. Mill Rate (16.274) $ 1,465Less: Home Owner Grant $ (700)Total Taxes $ 2,562
    9. 9. Mill Rates• Are determined by the Municipality• Takes the costs of running the City and spreads those costs across the pool of assessed values• “The amount of tax levied per $1,000 of assessed value”
    10. 10. Commercial ExampleLand $200,000Buildings $300,000Total $500,000Portioning (65%) $325,000Municipal Mill Rate (19.969) $ 6,490School Div. Mill Rate (16.274) $ 5,289Provincial Education Levy (12.330) $ 4,007Total Taxes $ 15,786
    11. 11. For More Information… City Website• “Taxes and Assessment”• “Property and Assessment Search”• “Board of Revision” (Assessment Appeals Process)

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