Death and Taxes - Part 2

Monday, March 26, 2018


Disclaimer ... The following is for discussion purposes only.  Please speak to an accountant, lawyer, tax professional, forester and any other professionals required to understand and correctly advise you for your particular situation

Did you do the homework from last week?  

It was a trick question :-)

There are actually two parts:

1- Property Valuation Services sends you a Property Assessment Notice each years that includes:

  • the Classification of each component (house, farm, forest, etc.)
  • the Assessed Value (they determine this based on local market value)
  • Capped Assessment (if you requested it)
  • Acres
  • the Taxable Assessed Value

2- The Municipal Tax Bill includes :

  • Particulars (ie: Residential Property, Farm, Forestry)
  • Assessment (the value of each Particular ... comes from Property Valuation Services Taxable Assessed Value)
  • Rate (set by each Municipality)
  • The Amount of Tax owing (Assessment x Rate)
So, how much tax are you paying on your woodlot?  If its Resource Exempt, the tax will be negligible.

If its taxed at a 'normal rate', it will be *a lot* more.

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But what if you are getting the Resource Exempt rate but you are not using your woodlot as a business?

1- If you never plan to use your woodlot to make money, you are not eligible to claim it as Resource Exempt.  Consider yourself lucky.  My reading suggests you can contact Property Valuation Services and they will adjust your Property Assessment Notice.  You also get a Good Citizen badge :-) (see disclaimer)

2- What if you get the favourable tax rate, you have some involvement with your woodlot but the commercial side is negligible to non-existent?

Property Valuation Services could randomly call you and ask you to prove you are using your woodlot as a business.  More likely the call will come when something happens like a property sale or subdivision.  The form they use for the reassessment as of March 2018 is [ here ].  

What constitutes using your woodlot as a business?  Things like :

  • active stand management
  • a forest management plan
  • blazing lines
  • clearing underbrush
  • replanting after harvest
  • interaction with a commercial harvester

And doing nothing because 'I'm trying to sequester as much carbon as possibe' isn't on their list (I asked)

So, what to do?

  • Look at your situation and the  [criteria used by Property Valuation Services  ] What makes sense for you?
  • Consider having a management plan prepared for your property.  It will identify the commercial opportunities and provide a time line for when it might happen.  The specifics are up to you

And what if you are operating your woodlot as a business and not getting a favourable tax rate?  Call Property Vaulation Services Corporation to get it resolved.

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Sorry ... this post was longer than usual.  Taxes are inevitable and everyone has to pay their fair share to keep things moving.  Understanding how the system works means you can take steps appropriate for your situation.

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And a big shout out to Property Valuation Services Corporation for helping me with these posts.  Their job is to properly value all properties across the province.  They do not set tax rates or tax policy.

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