OVERVIEW OF PROPERTY ASSESSMENT AND TAXATION IN THE NORTHWEST TERRITORIES

The Assessment and Taxation Process  Property assessment and taxation is a two- step process: 1.Assessment of property is the first step, where the value and classification of properties is determined, and any exemptions from assessment are determined. 2.Application of tax rates is the second step. Taxing Authorities apply tax rates (mill rates) to the assessed value of properties to determine the amount of taxes that are owed to the taxation authority.

Step 1: Property Assessment in the Northwest Territories  The Minister of Municipal and Community Affairs (MACA) is the property assessment authority.  MACA performs property assessments in all NWT communities.

What is property assessment?  Property assessment is the process used to assign a value to all assessable properties.  Property assessment is made up of two components: Land value and Improvements value.  Improvements may include buildings, machinery and equipment.  Personal property such as jewelry, cars, televisions and other personal possessions are not assessed.

How is property assessed?  Property assessors conduct property assessment according to the Property Assessment and Taxation Act (PATA) and Regulations.  Property assessors determine the value of each property by inspecting the land and the improvements located on the land.  Characterizing these components, such as municipal zoning, type of construction and age.  They also use of a series of property assessment cost manuals to ensure the assessments are fair and equitable across the NWT.

The Assessment Formula Improvement Assessment + Land Assessment _____________________ = Total Assessment

Why do assessments increase or decrease in value?  Changes in the assessed value reflect changes in property value. Some of the reasons that value can change are:  property may have been improved due to a renovation or an addition (or removal)  demand for property in the neighborhood may cause prices and market values to rise or fall  a change in zoning may have increased or decreased the value of the land

Annual and General Assessments  There are two types of property assessments: Annual Assessments and General Assessments.  Annual Assessments are assessments to capture annual improvement changes to properties, such as additions, renovations or deletions, or the addition of new properties.  General Assessments must be completed at least once every ten years. These assessments set the base year for assessment calculations. This allows equity between improvements of varying ages.

What is an Assessment Roll and how is it created?  An Assessment Roll is a listing of all assessable properties in a taxation area, usually by community. The Roll contains summary assessment information for each property.  Several versions of the Roll are created each year as new information comes forward, corrections are made and decisions are made concerning property owner appeals.  The Assessment Roll is a public document, and can be viewed at the community office.  The Assessment Roll 2 nd Revision is transferred to the taxation authority for the calculation of property taxes.

What is an Assessment Notice?  The Assessment Notice gives the pertinent property assessment information, such as legal description, owner’s name, assessed value, property classification and tax code.  A property owner should review all the information on the Assessment Notice to ensure correctness and to compare to other similar properties on the Assessment Roll.  The Assessment Notice also gives instructions on how and when an appeal can be filed.  Each year MACA prepares Assessment Notices and delivers them to individual property owners for every assessed property.

What if the property owners have a complaint about the information or assessed value of their property?  Property owners can appeal to the Territorial Board of Revision or their respective Municipal Taxing Authority Board of Revision.  If not satisfied with the Board of Revision’s decision, property owners may further appeal to the NWT Assessment Appeal Tribunal.  The final level of appeal is to the Supreme Court of the Northwest Territories.

When should a complaint be filed?  Property Owners must file an appeal within 45 days of the mailing date on the Assessment Notice.  Factors which warrant the filing of an appeal include:  errors of fact including structure description, quality, property classification, size, depreciation and land zoning;  perceived errors in assessment calculations;  differences between your assessment and similar properties in your neighbourhood.

Step 2: Property Taxation in the Northwest Territories  The Minister of Finance is the property taxation authority.  The Department of Finance collects property taxation in all NWT communities with the exception of the communities of Yellowknife, Fort Smith, Hay River, Fort Simpson, Norman Wells and Inuvik. These communities have been delegated property taxation authority within their own boundaries, and collect their own taxes.

Current Status of Taxing Authorities in the Northwest Territories  Municipal Taxation Authorities (MTA): Means the geographic area of a Municipal Taxing Authority being a city, town, village, that is declared to be a Municipal Taxing Authority. Currently there are six Municipal Taxing Authorities. They are the City of Yellowknife, Town of Hay River, Town of Fort Smith, Village of Fort Simpson, Town of Norman Wells and Town of Inuvik.  General Taxation Area (GTA): Means the areas that are not Municipal Taxation Authorities such as Hamlets, Charter Communities, Settlements and Band Communities. This area also includes properties located in the Hinterland area. Examples of taxed properties located in the Hinterland are the diamond mines and the oil & gas wells in the NWT.

Property Taxation Areas in the Northwest Territories  Municipal Taxation Areas In the Municipal Taxation Areas, the municipalities set the property mill rates, and the GNWT sets the school mill rates. The municipality collects the taxes for both the property and school levies. The municipalities use the property tax revenues to provide services for the municipality. The school tax is forwarded on to the GNWT for use to fund GNWT programs.  General Taxation Area In the General Taxation Area the property and school mill rates are set by the Department of Finance. The revenue from the collection of taxes is placed into the GNWT General Revenue Fund and is used to fund GNWT programs.

How are property taxes calculated?  It is the product of two factors: the individual property assessments from the assessment roll, and the municipal and school mill rates.  One “mill” represents $1.00 of tax for every $1,000 of assessment value. Here’s how the mill rate formula is applied to calculate the municipal portion of the property taxes (school taxes represent the remainder of the property tax bill ): (Assessment/1,000) x Mill Rate = Property Taxes

Why do property taxes go up?  Property taxes can increase for several reasons, such as:  The taxing authority needs to raise more revenue to provide services, so the property mill rates are increased. In the case of a MTA community, they pass a by-law to increase mill rates. In the case of the GTA, the Minister of Finance increases property mill rates.  The assessed value of a property increases due to changes made to a property which increases its value (e.g. addition, new garage or workshops).

Can property owners appeal property tax?  Property Tax cannot be appealed, except under exceptional circumstances.

Delegation of Taxing Authority  Non tax-based communities have the option of becoming tax-based if they so desire, and have demonstrated the ability to assume the additional duties and responsibilities.  Section 108 (1) of PATA states: “On the Minister’s own initiative or at the request of the council of a hamlet or charter community, the Minister, on recommendation of the Executive Council, may by order, declare that the hamlet or charter community is a municipal taxing authority.”

Tax-based Duties and Responsibilities of a Municipal Taxing Authority  Establishing property classifications  Establishing a Municipal Board of Revision for property assessment appeals  Setting mill rates by By-law for each property classification  Maintaining a property owner database for use in property taxation  Issuing tax notices to each property owner  Collecting property taxes, and collecting and remitting the education tax to the GNWT

The New Deal for NWT Community Governments  One component of the New Deal is to ensure community governments get the benefit of the property taxes raised in their community.  As a first step MACA created the Property Tax Revenue Grant Program. Through the Program, community governments receive a grant each year that is equivalent to the property taxes collected within the community during the previous year.  MACA is working towards implementing the property taxation component of the New Deal in the next few years.

Northwest Territories 2005 Property Count

Northwest Territories 2005 Assessment Totals

Northwest Territories 2005 Property Tax Revenue