Property tax in Canada is the tax, which the individual property owners are liable to pay. Property tax in Canada is also known as millage tax. Mill levy is another name for property tax in Canada.
There are two recognizable factors on which property tax in Canada is based. One is the assessed value of the property, which is evaluated by the local authorities. The other factor is the property tax rate, which is fixed by the municipality or the local authorities handling taxes.
The special assessment tax is sometimes mistaken for the property tax in Canada. The two are however different with regard to taxation. Property Tax is determined by the existing value of the property in the market and on the other hand, Special Assessment Tax encompasses the special assessment.
Types of property:
For imposition of Property Tax, three types of property are recognized.
- Land
- Personalty and
- Land Improvements
Real property, Realty and real estate are terms, which denote land and its improvements.
Property tax in Canada is different in the different provinces.
Basis of taxation:
In order to estimate as to how much tax a particular property would attract, the assessed value of the property is multiplied with the tax rate. Equal distribution of tax as per the property value is the main aim of municipal taxation. If the property value is assessed correctly, it would ensure that the property tax would also be justified. One common tool for finding out the value of a property is estimating market value. However, the market value of any property depends on the location, features of the property. All the provinces in Canada have their own assessment boards which take care of appeals related to property assessment.
Estimating the value of the property also depends on whether the property is currently being used or not. Property tax in Canada is an Ad Valorem tax and forms the main revenue source for municipalities in the country. Although property taxes vary but the procedure followed in evaluating a property remains the same throughout Canada. Estimating with the help of market value still remains the most preferred method owing to the vast differences in the results obtained when other methods are employed for the same.