Casual Legal: Tax incentives featured in Bill 20

By Michael E. Swanberg
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

Bill 20, the Municipal Affairs Statutes Amendment Act, 2024, received Royal Assent on May 29, 2024. 

While its provisions are not yet in force, this bill will give municipalities the power to create tax incentives to encourage the development of residential properties, and will exempt affordable housing accommodations from taxation starting in the 2025 taxation year.

First, section 363 will be amended to automatically exempt from taxation “affordable housing accommodation as defined in the Alberta Housing Act that is not exempt under section 361 of this Act.” The Alberta Housing Act defines “affordable housing accommodation” as “a housing accommodation designated by the Minister as an affordable housing accommodation.” Accordingly, any residences that are designated by the Minister of Seniors, Community and Social Services as “affordable housing accommodations” will automatically be exempt from municipal taxation. This will address a critical gap in the legislation regarding the taxable status of affordable housing that was recently highlighted by the Court of King’s Bench in McDonald v. Edmonton (City), 2023 ABKB 615. The provision will come into force on January 1, 2025, and is not applicable for the 2024 taxation year.

Note that a municipal council will be enabled, by bylaw, to make affordable housing accommodation taxable (subject to municipal property taxes) under section 363(3). That power does not extend to also make the property subject to provincial requisitions. The property will remain exempt from paying provincial requisitions regardless of whether council makes the property subject to municipal taxation by bylaw.

Second, section 364.2 will be amended to give municipalities the power to pass tax incentive bylaws “for the purpose of encouraging residential development and the provision of housing … for the general benefit of the municipality.” These tax incentive bylaws will operate similarly to the incentive provisions that apply to non-residential properties and machinery and equipment. This will address a critical gap in the legislation, and will allow municipalities to, for example, create tax incentives to encourage the development of rental apartment complexes. This provision comes into force on proclamation, and it is unclear at this time when that will occur.

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1-800-661-7673 or send an casuallegal [at] abmunis.ca (email) to reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please call 310-MUNI (6864) or send an riskcontrol [at] abmunis.ca (email) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.