INNISFAIL – It now appears there won’t be a sudden rush by local non-profit organizations to seek municipal tax exemption status.
A new administration report brought to Town of Innisfail council as information at its April 18 Agenda & Priorities Meeting made it clear that any group or organization considering a tax exemption application to the town will have many hoops to jump through.
“It is not super easy to just get an exemption. There is a lot of paperwork to fill out,” said Erica Vickers, the town’s director of corporate services who tabled the report. “Just because they are a non-profit it doesn’t mean they qualify. They have to do certain things for the community.”
The tax exemption issue for non-profits first came to town council on March 14 when separate tax exemption applications from the Innisfail Ski Hill and Innisfail Town Theatre (ITT) were tabled.
While granting municipal tax exemption status for non-profits is routine for other municipalities, such as Olds and Mountain View County, it was new territory for Innisfail.
“It’s good to be better versed in this area, and we will see where things go from here,” said Town of Innisfail Mayor Jean Barclay. “Each case is unique and yes, there are a lot of hoops to go through but they’ve always been there. If organizations feel they qualify they need to contact director Vickers and she will steer them through the process.”
In Alberta, property tax exemptions are legislated by the provincial government through the Municipal Government Act (MGA) and the Community Organization Property Tax Exemption Regulation (COPTER), which is then administered by municipalities.
Non-profits seeking tax exemption status are required to apply either annually or every three years.
The applications from the Innisfail Ski Hill and ITT were passed by council as they met the legal requirements under the MGA. The approvals will mean a combined loss of $9,038.35 in tax revenue for the town, which added to the concern of some council members on March 14.
However, what administration wanted to explore further, and report back to council, were the “charitable and benevolent purpose” provisions in the MGA, and how that could impact future applications.
“Given the evolving nature of non-profit operations, it is not a given that every organization registered as a non-profit will be exempt from property tax,” said Vickers in her report to council. “Current provincial property tax exemption legislation does not exempt organizations that, though non-profit, are structured to benefit their members rather than the greater community.”
Vickers’ report to council noted that in 1997 a review was completed by the provincial government to establish a set of principles and a process that could be applied to situations requiring consideration for municipal property tax exemption that involved non-profit organizations. The principles identified were:
• advancement of 'public benefit,' in terms of charitable and benevolent purposes, community games, sports, athletics, recreation, and educational purposes;
• recognition of the 'volunteer contribution and fundraising component' that mostoften characterizes 'not for profit' status organizations;
• advancement of youth programs and community care for the disadvantaged; and
• appropriate access to non-profit facilities and programs.
As well, Vickers told council there is a section in the MGA that allows certain properties that qualify for tax exemption status to be made taxable.
“And when (councils) want to make them taxable, they have to do it through a bylaw,” said Vickers. “So, this means they (non-profits) qualify under legislation but council could still choose to say, ‘you know what, even though they do qualify we don’t feel it is a good enough benefit to the public or we don’t feel the rest of the public should offset that money, so they can choose to make them taxable.”
She added that if such a bylaw is passed it can not come into effect until one year has passed.
As well, municipalities can’t single out certain properties in a specified class to pay taxes and allow other properties within that same class to remain exempt.
“For example, if a municipality wished to make non-profit child-care facilities taxable, this would apply to all properties that fall within that class,” Vickers said in her report. “The municipality cannot single out certain non-profit child-care operators for special treatment.”
Vickers said she has not received any public feedback since the tax exemption issue was made public in March. She said non-profits have until the end of this coming September to apply for tax exemption status in 2023.
“I truly don’t think we are going to have too many more,” she said. “We could see people like the Christmas Bureau or the food bank apply, and the business that they are in could have proportionate amount (tax exempt) but it would be very minimal because the Christmas Bureau is only in there for three months out of the year.”
