If you own property in New Brunswick, your 2016 assessment notice and tax bill is in the mail and will land on your desk within the next couple of days. It is dated the 1st of March, and unless your property is enrolled in our PAMS® Property Tax Manager program, you have work to do! You have just 30 days from the date your notice was mailed to review your assessment and decide if you will take action to reduce your tax burden this year.
New Brunswick tax payers are being asked to make additional sacrifices this year. The HST rate is increasing from 13% to 15%, reaching deep into consumers’ pockets and leaving businesses that rely on consumer spending with a smaller pie to compete for. The corporate income tax rate is on the rise and will increase from 12% to 14% (an increase of 16.7%) this year. The reward for these sacrifices is a budget deficit of $347 million this coming year, a provincial debt that will rise to $13.4 billion by the end of the fiscal year, and a projection of a balanced budget… in 2021! We’ve seen this movie before.
Do not despair! Opportunity knocks! Although it’s the tax man who reviews your self-assessment of your consumption and income taxes, the New Brunswick Assessment Act gives you the authority to review and provide your input on the tax man’s estimate of your property tax assessment.
The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the Real & True Value (a.k.a. market value) of your property on the 1st of January 2016 (the “base date”). Market value and “value to the owner” are not the same thing. Do not fall into the trap of asking yourself “at what price would I be willing to sell?” or in estimating your property’s value as an input to the going concern value of your business. Ask instead what others would be willing to pay if the property was offered for sale. Ignore value attributable to leases if your skill as an entrepreneur has allowed you to outperform the market in terms of rental and or vacancy rates and ignore the value of any speculative or hypothetical uses of the property.
Market value then is the first test: if your Realty Assessment exceeds your property’s market value on the 1st of January 2016, it is over-assessed and you should file an appeal. If not, try applying our unofficial uniformity test. While the New Brunswick Assessment Act does not contain a uniformity provision (i.e. require that assessments bear a fair relationship to one another), there are circumstances where assessors can be convinced that such should be the case. Multiply your property’s market value by the general level of assessment prevailing in your municipality. In our experience, these levels are usually in the range of 75% – 90%. If you’re still not sure, try comparing your assessment on a unitised basis to similar properties. If the resultant figure is less than your assessment or you are assessed at a higher rate than other properties you may be able to secure a tax reduction this year.
The Bottom Line: The Assessment Act empowers you to have a say in what your 2016 property taxes will be. Speak now or forever hold your peace!
Action Required: Review your 2016 assessment and file an appeal if there is an opportunity to reduce your assessment. Not sure? Contact our New Brunswick tax team, André Pouliot or Chris Jobe at (506) 634-1811 (Saint John) or 1-800-567-3033 (elsewhere).