Under section 234 of the Community Charter, July 2 is the date on which property taxes for a year are due under the general tax collection scheme. The Municipal Tax Regulation provides that if all or part of the property taxes payable under the general tax collection scheme remain unpaid after July 2, the collector must add a penalty equal to 10% of the portion that remains unpaid. Under the general tax collection scheme, a municipal council does not have the authority to change the due date, or to provide any relief from the penalty provisions of the Municipal Tax Regulation. So far, the Province has not changed the due date under the general tax collection scheme in response to the COVID-19 pandemic, or the penalty provisions under the Municipal Tax Regulation.
Municipalities that want to provide relief to property owners in response to the COVID-19 pandemic, by deferring property tax due dates and related penalties, would need to consider adopting an alternative municipal tax collection scheme under section 235 of the Community Charter. Under section 235, a Council may, by bylaw, establish one or more dates on which all or part of the property taxes under Part 7, Division 10 are due. A bylaw establishing an alternative municipal tax collection scheme may do one or more of the matters referred to in section 235(3), including establishing penalties and interest to be applied in relation to payments made after a tax due date established by the bylaw. A bylaw under section 235 must establish an annual election period during which owners may make elections under section 236.
Under section 236, an owner has the election whether to pay under the municipal scheme, or the general tax collection scheme. If an owner does not make an election, then as long as the municipal tax collection scheme does not establish due dates that are before July 2, and does not establish interest or penalties that exceed those imposed under the general tax collection scheme, the municipal tax collection scheme applies. In other words, in those circumstances the municipal tax collection scheme is the default scheme. If the alternative municipal tax collection scheme establishes due dates that are before July 2, or interest and penalties that exceed those under the general tax collection scheme, and if no election is made, the general tax collection scheme is the default scheme.
Municipalities that are considering using their powers under section 235 in response to the COVID-19 pandemic will obviously need to consider the broader implications of a change in property tax due dates, in relation to their own financial requirements, and their obligations to other public bodies on whose behalf the municipality collects taxes. But if a Council wants to provide short term financial relief to property owners by extending the time for payment of property taxes, section 235 provides the only statutory mechanism for doing so. A municipality considering adopting an alternative municipal tax collection scheme for the first time should seek legal advice about the requirements of the legislation.
