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History of Assessment

Within Canada and Alberta

The following information has been excerpted from the Property and Assessment in Alberta Handbook.

Various forms of property tax have been used throughout history. During the settlement of North America, some attempts were made in the British colonies to tax property based on its value.

These taxes were often levied at fixed rates on specific items, such as livestock and personal possessions. These taxes, however, usually favoured the politically powerful and unfairly burdened the politically weak.


Canada


The early system of taxation in Canada was a uniform tax that was based on the value of property owned. This system was brought into Canada by the United Empire Loyalists when they fled from the American Revolution.


The Loyalists were accustomed to a system of self-rule in which local bodies had the authority to levy taxes. Governments adopted local taxation as a means to raise the money that was needed to provide services.


By the nineteenth century, all property was taxable. This included homes, land, boats, and household goods. This system was difficult to administer, as many types of taxable property could be moved on assessment day and could not be located.


Alberta

Property assessment for taxation purposes in Alberta can be roughly divided into two time periods—pre-1995 and post-1994.

Pre-1995

The early property assessment system in Alberta evolved in line with legislation used by other Canadian provinces. Ontario’s Municipal Act of 1880 allowed taxation of “real property”— land and buildings.


The Municipal Ordinance of the Northwest Territories (1882) was an adaptation of Ontario’s Municipal Act. It brought the general property taxation principles and procedures to what became Canada’s western provinces.

A variety of assessment methods have been used by local governments to generate tax revenue. The assessment system most widely used up until 1995 was referred to as fair actual value. The value of buildings, structures, and farm land was determined on the basis of formulas and rates.


These formulas and rates were set out in regulated manuals prepared by the provincial government. All land, except farm land, was assessed based on its market value.
A view of a country-side

Municipalities were only required to prepare new assessments every eight years. Under the eight-year assessment cycle, property values often changed dramatically. This system led to major assessment and property tax shifts in the year after the reassessment year.

Assessment review committees in the early 1990s recommended that Alberta’s property assessment system should be changed from the eight-year cycle fair actual value system to a current, market value-based system. Also, some court decisions during this time indicated that assessments should reflect current market values.

An empty residential lot

Market value is the price a property might reasonably be expected to sell for if sold by a willing buyer after appropriate time and exposure in an open market. The rationale for recommending the change to a market value-based system considered many important factors:

Market value is easily understood, as property owners typically have an informed opinion as to their property’s value. • Market value is considered by many professional organizations and governments to be the most fair and equitable way to assess property. • Market value assessment systems are used in the majority of local government jurisdictions throughout North America.

Post-1995 – The Municipal Government Act

In 1995, the new Municipal Government Act came into force. The Municipal Government Act consolidated a number of acts governing municipalities, including the former Municipal Government Act, the Municipal Taxation Act and other related legislation. In addition, the act set out the foundations for a current market value-based assessment system for most property in Alberta.


The Municipal Government Act gives direction to municipalities to prepare assessments every year.

The Municipal Government Act sets out two types of valuation standards for assessment purposes – the market value based standard and the regulated procedure based standard.


The market value based standard is considered the most fair and equitable means of assessing property. It is fair because similar properties are assessed in the same manner; it is equitable because owners of similar properties in a municipality will pay a similar amount of property tax.


The regulated procedure based standard uses rates and procedures prescribed by Alberta Municipal Affairs to calculate assessed values for certain types of properties. These types of properties include farm land, linear property, machinery and equipment, and railway property.
A view of a large available lot