If you operate a business and also own the property from which you operate your business in Calgary, you will be responsible for property taxes. Nobody likes paying taxes but it’s a fact of life and unavoidable. However, you may be wondering how the City of Calgary decides on how much you should pay and how property taxes are accessed. This short primer will give you a better understanding of how the process works and some basic information you should know.
How Calgary Business Taxes are Determined
First, the City of Calgary applies 3 methods to establish the value of a commercial property, and it also depends on the type of non-residential property being accessed.
1. Sales – This approach uses a comparison of sales of similarly related properties.
2. Income – This approach consider the income which is generated by the property.
3. Cost – This approach utilizes the land value while adding the depreciated replacement cost of the non-residential property.
What is a Business Assessment?
A business assessment is defined as the value which has been assigned to the commercial business by reflecting the typical annual value for that particular business premises. The assessment has nothing to do with the type of business or the purpose of the business.
How Business Assessment is Calculated
The business assessment calculation uses a simple formula which multiplies the area of the business premise by the net annual rate per square foot for that type of business.
How the City of Calgary uses your Business Assessment to Determine Taxes
Before the City of Calgary decides on what the business taxes will be, they first have to decide what budget they will need to provide City services. City Council then uses the total accumulative they have determined from their assessment of the entire business base. Using this amount they are able to determine the tax rate to be able to fund the budget relative to what is required from the business tax.
This formula might better illustrate how they access you business tax rate.
City budget requirements ÷ Total assessed value of all Calgary businesses = Tax rate
As described above, the assessment of your business property is the typical net annual rental value of your premises or:
Typical net annual rental value = Your Business Assessment
The share of taxes you pay is calculated based on the assessed value of your premises. The assessed value of your business which is shown on your Business Assessment Notice is multiplied by the business tax rate which has been determined by the City Council for that year. The tax you will be required to pay is shown in this simple formula:
Business assessment x Business tax rate = Individual business tax
Once the tax rate has been established, the rate remains fixed and will not be altered regardless of what happens in terms of property values or the increase or decrease in the business base until the next budget is determined for the following year.
When is a Property Tax Due?
Property tax bills are generally mailed at the end of May and are due near the end of June (Specific mailing and due dates may vary slightly from year to year). Any unpaid balance is assessed a 7% penalty which is added on July 1st and again on October 1st on any unpaid balance.
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