CASUAL LEGAL: ‘Tis the Season for (Tax) Forgiveness

‘Tis the Season for (Tax) Forgiveness

By Daina Young

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

In challenging economic times, municipal councils may receive requests from property or business owners for the cancellation, reduction, refund or deferral of taxes. A municipal council has the authority to grant this relief, under s. 347(1) of the Municipal Government Act, either “generally, or with respect to a particular taxable property or business or a class or taxable property or business”. A council may cancel or reduce tax arrears, cancel or refund all or part of a tax, or defer the collection of a tax; with or without conditions.

However, s. 347(1) of the Municipal Government Act has been interpreted narrowly and there are a number of restrictions on Council’s authority that should be kept in mind.

First, a council can only grant relief under s. 347(1) of the Municipal Government Act if “a council considers it equitable to do so”. Although council has a broad discretion in this regard, provided that its decision is made in good faith, it is important that the information put before council at the time of its decision contain sufficient detail to allow council to make this determination.

Second, council’s authority under s. 347(1) applies only to taxes that have already been imposed. This means that council cannot, in reliance on this provision, enter into an agreement with a property or business owner to cancel or reduce taxes for future taxation years.

Third, s. 347(1) applies only to the municipal portion of taxes, and would not extend to school taxes or other requisitions under the Municipal Government Act. A municipal council does not have the authority to cancel, reduce, refund or defer these taxes or requisitions.

If a municipality wishes to assist local businesses, there are other options that a municipal council can consider, provided that the program in question otherwise complies with the requirements of the Municipal Government Act. For example, municipal grants or a tax incentive bylaw of general application for non-residential property under s. 364.2 of the Municipal Government Act.

To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca (casuallegal[at]amsc[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] auma.ca (riskcontrol[at]auma[dot]ca), or call 310-AUMA (2862) to speak to AUMA’s Risk Management staff. Any Regular or Associate member of the AUMA 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.