Assessment is the process of valuing property for the purpose of fairly and equitably distributing a municipality’s total property tax among property owners. This process establishes the value of a property in relation to similar properties and does not in itself generate property taxes. Property taxes are generated when the Provincial school & Municipal tax rates are multiplied by the assessed value of your property. The municipal tax rate is also known as the municipal mill rate.
Assessment is governed by the Municipal Government Act of the Province of Alberta and associated regulations. The assessment department works hard to value property as fairly and equal as possible.
In the preparations of the assessment, the Municipal Government Act and associated regulations define two types of property:
Regulated – These properties are valued according to rates published by Alberta Municipal Affairs for the express purpose of assessment and include properties such as farmland, railway, machinery & equipment and linear (i.e. pipelines, electric power, transmission lines, telecommunications equipment).
Non-Regulated – These properties are valued based on their estimated market value, and include residential, commercial, and industrial properties (i.e. hamlet residences, acreages, farm residences, warehouses, gas stations, restaurants, etc.)
In accordance with the MGA & Regulations, each year the Assessor must determine an estimate of “market value” that is based on the “fee simple estate” as of July 1 of the assessment year.
Alberta Municipal Affairs audits each municipality’s assessment each year to ensure that it is complete, accurate, and meets the quality standards set out in the MGA, Regulations, and Minister’s Guidelines. Assessment Auditors examine the Assessor’s required data submission and report back to the municipality upon completion.
Fundamentals of Property Assessment & Taxation
Property assessment in Alberta is the basis for property taxation, which is the major source of revenue generated from within the municipality for financing local government services. Local government services in a rural county such as ours, are mainly construction and maintenance of roads, weed control, municipal development and fire protection. The property tax system used throughout Canada is an ad valorem tax system. An ad valorem tax is based on the principle that the amount of taxes paid should depend on the value of property owned. The assessed values used for tax purposes must be accurate so that the tax burden is distributed fairly.
There are two fundamental principles, which underlie taxation of real property. They are (1) the principle of benefits received and (2) the principle of ability to pay.
Local government services such as roads, weed control, waste management, fire protection and water and sewer services in hamlet areas are all benefits that accrue to real property due to the actions of the County. In every taxation system in Canada there is a relationship between the taxes that people pay and the benefit they receive. This is in essence the principle of benefits received.
Under the second principle, that is the principle of ability to pay, the value of real property is used to determine its assessment. The value of property does not necessarily mean that the property can generate more money with which to pay property taxes. Therefore, the principle of ability to pay, which is primarily the rationale of assessment, is tempered at the municipal level by the principle of benefits received, which is the rationale of the tax rate.