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Business Tax Consolidation - Q&A

1. How does business tax consolidation work? 

The consolidation process works by transferring business tax revenues into the non-residential property tax through incremental transfers over a seven-year period. The first transfer occurred in 2014 with 10 per cent of business tax revenues transferred to and collected through the nonresidential property tax. The last transfer will occur in 2019, culminating with the elimination of the business tax.

2. How will the revenue transfers work?
 1. Council annually determines its revenue requirements from each revenue sourcerce.

  
 2. In 2015, an additional 10 per cent of business tax revenues will be transferred to and collected through the nonresidential property tax, resulting in a total 20 per cent decrease to the business tax rate.
 
 3. In 2015, the non-residential property tax rate will see an additional estimated 2.3 per cent increase, for a total estimated increase of 4.6 per cent to account for the reduction in business tax revenues.
 
Your share of tax is calculated by multiplying your 2015 property or business assessment by the approved property or business tax rate.
 
Note: Business tax consolidation is a revenue neutral process, meaning it will not increase the amount of revenues collected by The City.
 
3. Will Business tax consolidation affect my property/business assessment?
No. Business tax consolidation will not directly impact property/business assessments, nor will it be reflected on the Assessment Notices.
 
4. What are the 2015 tax impacts from business tax consolidation? I am a business owner
You will see an additional 10 per cent decrease in the 2015 business tax rate. The total decrease for business tax due to consolidation will be 20 per cent. The City will mail 2015 business tax bills in February. The tax change effects from business tax consolidation will be reflected in your taxes owing.
  
5. I am a non-residential property owner
You will see an estimated 2.3 per cent increase in the 2015 non-residential property tax. The total non-residential property tax increase due to consolidation will be 4.6 per cent. The City will mail 2015 property tax bills in May. The tax change effects from the business tax consolidation process, and any other 2015 tax rate adjustments made by Council or the Government of Alberta, will be reflected in your taxes owing. If you have tenants operating a business on your property, the business tax rate applied to their premises will decrease an additional by 10 per cent.
 
6. Why was the seven-year implementation period selected
The seven-year timeframe provides time to plan and adjust to the single tax environment. Council directed the seven-year implementation period to allow the business community time to find market place solutions which will work better for them than government-dictated solutions. Also, the seven-year implementation timeframe also allows The City to avoid spending approximately $2.5 million to develop a new tax software system.
 
7. Will business tax consolidation mean The City will collect more tax revenues from non-residential property owners?
The consolidated business tax revenues will be subject to a zero per cent business tax rate increase and the consolidation process will be based on an approach that is revenue neutral to The City. Revenue neutral means The City will generate no more or no less revenues due to the transfer of business tax revenues to the non-residential property tax, and the effect of Council’s zero per cent business tax rate increase policy will continue to apply to the business tax amount transferred to the non-residential property tax.
 
8. Are there mitigation strategies are in place to assist non-residential property and business owners during the consolidation implementation period?
The seven-year implementation period time to plan and adjust to the single tax environment and therefore refund or mitigation programs are not necessary. The incremental revenue transfer period started in 2013 with a zero per cent transfer, with 10 percent transferred in 2014, and an additional 10 percent in 2015. This will allow sufficient time for the market place to adjust and find solutions to outstanding issues such a vacancy, partial development and vacant land. The City believes the seven-year implementation period allows the business community sufficient time to find market-based solutions which will work better for them than government-dictated solutions.
 
9. How will Business Revitalization Zones receive funding after business taxes are eliminated in 2019?
The business assessment and business revitalization zone levy process will continue until such time as a suitable financing alternative is established.
 
10. Will non-residential property and business owners receive assessment notices and tax bills during the consolidation implementation period?
Yes. The City will continue to send property and business assessment notices and tax bills throughout the business tax consolidation period until 2019, when business tax will be elminated by 2019. Business and non-residential property owners will receive updated information on the consolidation process with each year's annual assessment notice.
 
11. How will business tax consolidation affect my property and/or business Tax exemptions?
Non profit organizations with a business tax exemption only will se increases to their property tax each year over the seven-year implementation time frame, up to a total of approximately 28 percent in 2019. City Council directed that a mitigation program for this increase be implemented for businesses that are exempt from business tax under the business bylaw.
 
The mitigation program will consist of a three year "no impact" period:
 
  1. a zero percent increase in 2013
  2. a property tax refund in 2014 and 2015 equal to the increased property tax amount due to consolidation for the properties, or portions thereof, occupied by non-profit organizations.
 
After the no impact period, the tax increases due to consolidation for business-tax exempt organizations will occur incrementally over the remaining time frame.
  
Business Tax Consolidation - Tax Change Effects
Year
Business tax change
Non-residential property tax changes
2013
0%
0%
2014
-10%
2.3%
2015
-10%
2.3%
2016
-20%
4.6%
2017
-20%
4.6%
2018
-20%
4.6%
2019
-20%
4.6%
Total
100%
23.0%
The business tax, for business tax revenue purposes, will be eliminated in 2019.
 
By 2019, business tax, for business tax revenue purposes, will be eliminated.