April 3, 2020 – Winnipeg, MB: - In light of recent events, many small business owners are facing challenging times and prompted to make difficult decisions through the means of temporary closures and employee layoffs. Many owners have turned to the government in hopes of finding relief in either rent or business tax appeals.
On Friday, April 3, the Manitoba Government announced a six-month deferral on municipal education taxes. The City of Winnipeg then announced a three-month deferral on property taxes. Both taxes are collected on the same bill. For most commercial properties, the education portion amounts to roughly 55% of the total bill, while in residential properties, it amounts to a slightly smaller portion. During these unprecedented times, any efforts to help taxpayers by all levels of government would be welcomed.
Currently, the Provincial legislation is allowing for the collection of business tax, with a number of cities already in the application process, and more specifically, the city of Winnipeg.
The City of Winnipeg Charter states:
Cancellation or reduction of taxes
340(1) The tax collector must correct the tax rolls for the year and cancel or reduce taxes before or after the tax rolls have been prepared, if the city assessor reports one of the following changes has occurred:
(f) a business has ceased to be operated and is no longer subject to business assessment.
Rocky Neufeld, Senior Director, Property Tax Services at Colliers International has been working tirelessly for his clients, with the City of Winnipeg, to come up with a sustainable business continuity solution in the hopes of attaining business tax deferrals due to the many challenges brought on by the COVID-19 pandemic. To date, the City of Winnipeg has provided very little insight on their decisions to continue requesting business owners pay business tax on companies that have ceased all operations.
“We have been working diligently since late January, analyzing the potential impact of COVID-19 to our markets. As the situation worsened, we began efforts to work within the framework of our tax laws, not to get relief, but to have the rules enforced. We believed that the small and medium sized businesses were most vulnerable, and agreed with projections that 25% to 40% would not re-open.
The small business is the backbone of the Canadian economy, and has created more jobs than any other sector. We know that the small business growth was likely the greatest factor in recovering from Canada’s last major recession, and stabilizing it from re-occurrences. Small business is home-grown, not vulnerable to globalization, or most external factors – until now. Emergency support by the three levels of government have been exceptional, but is not geared towards small business. We talk to our clients; we know their issues. On March 9, we began the formal process of requesting that the business tax follow the law. Colliers is not charging for our service to correct the business tax situation.”
Given that no one could have foreseen a global pandemic, said Acts from each respective charter, had not contemplated the effects of national, provincial or civic declarations of emergencies, forcing business closures. However, the business closures are not temporary, they are currently undetermined.