The process of calculating residential and recreational provincial property tax invoices is getting an overhaul which will make tax payments more predictable and cap increases.
Premier Pat Binns and the Honourable Pat Mella, Provincial Treasurer, today announced a comprehensive plan which will ensure important changes to the province's property tax system for residential and recreational properties. The changes instituted will ensure that property owners will no longer be vulnerable to possible spikes in non-commercial property taxes caused by escalating property values in Prince Edward Island.
The current provincial assessment and property tax system was first implemented in 1971 and has not undergone any material changes since that time.
"The reforms we are making today will instill predictability and impose a cap to increases to property taxes. We believe these important changes will make our province a leader in property tax reform in Canada," said Premier Binns.
The plan for tax fairness announced by the Premier and Minister includes:
• A new residential and recreational tax credit which will limit increases of provincial non-commercial property taxes to no more than the Consumer Price Index (CPI) each year.
• The deadline for assessment referrals will be doubled from 45 days to 90 days.
• A no-penalty referral process will be established whereby property owners will be encouraged to have their tax assessment reviewed if they suspect a mis-calculation.
• Property assessment notices will be printed and distributed separately from provincial tax invoices to afford more clarity.
"These are very positive changes for Islanders and once again our province is leading the way by providing a better service to the taxpayer," said Minister Mella.
The tax credit works like this:
• The benchmark for calculating the credit will be the assessment year for 2002; consequently, the credit will apply to current year provincial non-commercial taxes.
• When an owner-occupied residential property is transferred, the initial provincial non-commercial tax to the new owner would be calculated and the resulting tax would be used as a benchmark to calculate each succeeding year until the property is transferred to another owner.
• The difference between the annual CPI and the provincial non-commercial tax bill will show as a provincial tax credit on the tax bill. Taxes will only increase in excess of the CPI if there are improvements, renovations, or material changes in use.
The tax fairness package comes into effect immediately and tax credits will be processed before the fall session of the Legislature.