+ RMA Rural Municipalities
of Alberta

Resolution 14-05S

Non-residential Split Assessment Classes

January 1, 2005
Expiry Date:
March 31, 2008
Active Status:
Municipal Governance and Finances
Vote Results:

WHEREAS the Province has created a disparity within the non-residential assessment class by providing a statutory level of assessment based on 77% of the value of machinery and equipment, which already receives a 25% depreciation reduction; AND WHEREAS properties that have machinery and equipment tend to have between 80-85% of their assessable property as machinery and equipment, with the rates for determining the value being regulated by the Province; AND WHEREAS commercial properties within the non-residential class are assessed at 100% of their market value, and do not receive a tax exemption from education tax like the industrial subclass and as the market values increase their percentage of the taxation base increases;

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request the provincial government to either amend the Municipal Government Act to allow for the non-residential class to be subdivided into industrial and commercial classes to provide for a split tax rate, or that machinery and equipment be assessed at 100% value rather than 77%.

Member Background:

In 1994 the provincial government started phasing out the education tax charged to the machinery and equipment (M&E) assessment class and by 1997 amended the tax structure to totally eliminate it. At the time that the education tax was removed from M&E, this class was assessed at a statutory level of 77% of their value, which already provided a taxation relief of 23% as well as a 25% depreciation where other classes have a requirement to be assessed and taxed at 100% of their market value. This has created an inequity between property owners in that all other taxation classes pay education taxes based on their assessed value and the portion of the equalized share of the provincial education tax that the municipality is responsible for. In 1997, the largest industrial taxpayer in the County of Grande Prairie saved over $1 million in taxes based on the education tax exemption alone. Municipalities see this as a disparity within the non-residential class. Properties that are commercial fall within the non-residential class and their properties are assessed at market value. Properties that have machinery and equipment usually consist of 80-85% machinery and equipment. By having this statutory level at 77%, they do not share in the same level of taxation and this is seen as being unfair. As market values increase in the commercial classification, the percentage of the tax base that they contribute to municipal taxes increases. And with their contribution based on 100% of market value, essentially their contribution to municipal revenues effectively increases each year. The industrial classification receives a significant tax advantage in that firstly, their assessment is regulated by the Province and they receive a 23% reduction. An additional tax advantage is gained by the machinery and equipment also receiving a reduction for depreciation each year. The disparity between these two non-residential subclasses grows each year.

RMA Background:

The AAMDC has one resolution in effect that is similar to the resolution above. Resolution 25-02F, endorsed at the fall 2002 convention, urges the provincial government to amend Section 297 (1) of the Municipal Government Act to provide municipalities with the legislative authority to create a sub-class under the non-residential class of assessment for linear property, and amend Section 354 of the MGA to allow a municipality to set different tax rates for the non-residential, linear and machinery and equipment assessment classes.


The Ministers Council on Municipal Sustainability recommended that own-source revenues such as limited split mill rates be considered. However, the Government of Alberta reserved decision on this recommendation pending consultation with municipalities and other stakeholders regarding its implications. In the meantime, Municipal Affairs is committed to working with both municipal and industry stakeholders to develop solutions that will address the concerns of all parties within the existing legislative framework.

Provincial Ministries:
Municipal Affairs
Back to Resolutions Database