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The Education Property Tax Reduction Act (Property Tax and Insulation Assistance Act and Income Tax Act Amended)

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S.M. 2021, c. 55

Bill 71, 3rd Session, 42nd Legislature

The Education Property Tax Reduction Act (Property Tax and Insulation Assistance Act and Income Tax Act Amended)

Explanatory Note

This note was written as a reader's aid to the Bill and is not part of the law.

Municipalities impose property taxes that include the amounts they are required by The Public Schools Act to raise for school purposes. These are commonly referred to as school taxes.

A levy is imposed, in lieu of school taxes, on the incremental assessed value of properties designated under The Community Revitalization Tax Increment Financing Act as community revitalization properties. For the purpose of this note, "school taxes" includes the community revitalization levy.

This Bill is designed to reduce school taxes by means of a system of rebates.

Part 1 — Education property tax rebates

Part 1 amends The Property Tax and Insulation Assistance Act by adding Part II.1 to provide for the following rebates beginning in 2021:

25% of school taxes on farm and residential properties;

10% of school taxes on other properties.

After 2021, these percentages may be increased by regulation.

The school tax rebate is payable to a person in whose name the school taxes are imposed (according to the municipal tax rolls). If there are multiple owners of a property, the rebate may be paid to any of them. If a person other than the rebate recipient is responsible for the property tax, the person may recover their share of the rebate from the rebate recipient.

The rebate may be paid before or after the school taxes are due. No application for the rebate is required.

If a rebate recipient who pays a community revitalization levy is entitled to a refund by way of a grant under The Community Revitalization Tax Increment Financing Act, the rebate in respect of that levy reduces the amount of the refund.

The following items are also reduced by the same percentage that applies in determining the school tax rebate for residential and farm properties under Part II.1:

the school tax assistance of up to $175 provided under Part III to pensioner tenants whose family income is less than $23,750;

the farmland school tax rebate of up to $5,000 provided under Part III.1.

Part 2 — Income tax credits and rebates

The Income Tax Act currently provides for the following in respect of a taxpayer's principal residence:

a school tax reduction of $700 to be credited on the property tax bill for a single family dwelling;

an education property tax credit of up to $1,100 for seniors and $700 for everyone else, less any school tax reduction applied to the property tax bill;

a school tax credit of up to $175 for persons aged 55 and up whose family income is less than $23,750;

a seniors' school tax rebate of up to $470 for a senior whose family income is less than $63,500.

Part 2 amends The Income Tax Act to reduce these benefits by 25% for 2021 and later years. After 2021, the percentage may be increased by regulation to match the percentage of the school tax rebate for residential properties under The Property Tax and Insulation Assistance Act.

The education property tax credit advance (the school tax reduction for a principal residence) is also reduced for 2021 to 75% of the lesser of $700 and the school taxes otherwise payable.

Part 3 — Related amendments

Under The Community Revitalization Tax Increment Financing Act, the community revitalization levies imposed on some properties are refunded to the property owner as a grant. As a red tape reduction measure, the Act is amended to allow such properties to be exempted from the levy by regulation.

The Municipal Act is amended to require tax notices to include material supplied by the minister.

The Residential Tenancies Act is amended to provide for a rent freeze for 2022 and 2023 for properties that are subject to rent regulation under Part 9 of that Act.

A landlord may still apply for a rent increase under section 123 of that Act (application for increase above maximum permitted by regulation), but the landlord's school tax rebate under The Property Tax and Insulation Assistance Act will be taken into account before any order is made in response to the application.

The $50 school tax reduction provided for in the School Tax Reduction Regulation (L.G.D. of Pinawa) is reduced by 25% for 2021. In subsequent years, it will be reduced by the same percentage that applies in determining the school tax rebate for residential properties under Part II.1 of The Property Tax and Insulation Assistance Act.

Because of the amendment to the school tax reduction provided for in The Income Tax Act, the School Tax Reduction (2021) Regulation is repealed. Repealing the regulation does not change the school tax reduction for 2021.

(Assented to May 20, 2021)

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART 1

EDUCATION PROPERTY TAX REBATES

C.C.S.M. c. P143 amended

1

The Property Tax and Insulation Assistance Act is amended by this Part.

2

The following is added as Part II.1:

PART II.1

GENERAL SCHOOL TAX REBATE

Definitions

12.1

The following definitions apply in this Part.

"applicable percentage" means,

(a) in relation to farm or residential property,

(i) for the 2021 taxation year, 25%, and

(ii) for the 2022 or any subsequent taxation year, 25% or, if a greater percentage is prescribed by regulation for farm or residential property for that year, the prescribed percentage for that year; and

(b) in relation to any property other than farm or residential property,

(i) for the 2021 taxation year, 10%, and

(ii) for the 2022 or any subsequent taxation year, 10% or, if a greater percentage is prescribed by regulation for such other property for that year, the prescribed percentage for that year. (« pourcentage applicable »)

"farm or residential property" means property that is within any class of property prescribed under The Municipal Assessment Act as Residential 1, Residential 2, Residential 3 or Farm Property. (« bien agricole ou résidentiel »)

"minister" means the Minister of Finance. (« ministre »)

"occupier", "person", "real owner" and "registered owner" have the same meaning as in The Municipal Assessment Act. (« occupant », « personne », « propriétaire inscrit » et « propriétaire véritable »)

"property taxes", in relation to a property for a taxation year, means the property taxes, including school taxes, imposed in respect of the property for the year by a municipality. (« taxes foncières »)

"school tax rebate" means a rebate payable under section 12.2 in respect of school taxes. (« remboursement de taxes scolaires »)

"school taxes", in relation to a property for a taxation year, means the portion of the property taxes imposed (or that would be imposed but for subsection 5.6(1) of The Income Tax Act) in respect of the property for the year

(a) to raise the amount to be raised by taxation for school purposes; or

(b) as a community revitalization levy, if any, imposed under section 11 of The Community Revitalization Tax Increment Financing Act.

It does not include supplementary taxes imposed under section 326 of The Municipal Act or section 341 of The City of Winnipeg Charter. (« taxes scolaires »)

"tax due date", in relation to a property for a taxation year, means the day on which the property taxes for that property are due or would be due if they were not being paid under an instalment plan. (« date d'échéance du paiement des taxes »)

"taxpayer", in relation to a property for a taxation year, means

(a) a person who is liable to pay the property taxes imposed for the year in respect of the property;

(b) a person who is required to pay all or any part of the property's property taxes for the year, whether

(i) under a written agreement,

(ii) as a registered owner or real owner of the property, or

(iii) as an occupier who is liable under subsection 25(1) of The Municipal Assessment Act to pay the tax;

(c) if a person referred to in clause (a) or (b) has died,

(i) the person's legal representative, or

(ii) any heir who has become the registered owner or real owner of the property;

(d) while a person referred to in clause (a) or (b) is in bankruptcy, the person's trustee in bankruptcy; and

(e) any other person who the minister recognizes as a person who paid the property's property taxes for all or part of that year. (« contribuable »)

Rebate payable by government

12.2(1)

Except as otherwise provided in this Part, a school tax rebate is payable by the government for each taxation year after 2020 equal to the applicable percentage of the school taxes imposed in respect of a property for that year.

No rebate for less than $2

12.2(2)

No school tax rebate is payable under this Part if the amount of the rebate, but for this subsection, would be less than $2.

To whom payable

12.3(1)

The school tax rebate for a property for a taxation year is payable to a person in whose name the property is assessed for that year according to information set out in the municipality's completed tax roll provided to the minister for that year. If there are two or more such persons, the minister may pay the rebate to any one or more of them.

When payable

12.3(2)

The rebate may be paid before or after the tax due date for the school taxes in relation to which it is payable.

More than one taxpayer

12.4

If there is more than one taxpayer in respect of a property for a year, any taxpayer who did not receive the rebate paid under this Part in respect of the property for the year is entitled to recover from the rebate recipient, as a debt owing to them by the recipient, an amount equal to the proportion of the rebate that

(a) the amount paid by them as or on account of the property taxes for the year;

is of

(b) the amount of the property taxes imposed in respect of the property for the year.

Assessment of overpayment

12.5(1)

If a school tax rebate for a taxation year was paid in error or was based on an amount of tax that was later cancelled or reduced for that year under section 300 of The Municipal Act or section 340 of The City of Winnipeg Charter, the Minister of Finance may issue a notice of assessment to the rebate recipient specifying the amount to be repaid, which is

(a) the amount paid in error; or

(b) the applicable percentage of the amount of the reduction in the school taxes or, if they were cancelled, of the amount that was cancelled.

Overpayment recoverable as debt

12.5(2)

The amount specified in the notice of assessment is payable to the Minister of Finance within 30 days after the date of the notice and is a debt owing by the rebate recipient to the government.

Interest payable

12.5(3)

If a person fails to pay the debt in full on or before the day it is due, interest is payable by the person on the unpaid amount, at the rate prescribed under The Income Tax Act for the purpose of subsection 5.6(4) of that Act, from the date of the notice of assessment.

Set-off against future rebate

12.5(4)

In addition to any other remedy the government has to recover a debt owing under this section, the Minister of Finance may authorize the amount of the debt, including interest, to be deducted from, or set off against, any future rebate payable to the debtor.

Rebate recipient entitled to contribution from other taxpayer

12.5(5)

If another taxpayer has recovered all or a portion of a rebate from the rebate recipient as permitted by section 12.4, the rebate recipient is entitled to a pro rata contribution from the taxpayer to the repayment required under this section.

Rebate paid as advance of community revitalization grant

12.6

To the extent that a rebate paid under this Part in respect of a property is attributable to a community revitalization levy, the rebate is deemed to have been paid as an advance on account of any grant payable in relation to the property under The Community Revitalization Tax Increment Financing Act to a taxpayer in relation to the property.

Statutory appropriation for 2021

12.7(1)

Each rebate payable under this Part for the 2021 taxation year is payable out of the Consolidated Fund without any legislative authority other than this subsection.

Appropriation for 2022 and later years

12.7(2)

Each rebate payable under this Part for a taxation year after 2021 is payable out of the Consolidated Fund with money authorized by or under an Act of the Legislature to be so paid and applied.

Information to be provided to minister

12.8(1)

In order to facilitate the administration of this Part and The Income Tax Act, a municipality's completed tax roll must be provided to the minister at, and in accordance with, the minister's request.

Disclosure of information about rebates

12.8(2)

After a rebate has been issued in respect of a property for a taxation year, the minister may,

(a) upon written request by a taxpayer or their legal representative in relation to that property for that year, disclose to the taxpayer or legal representative the name of the person to whom the rebate was issued and the amount of the rebate; and

(b) if the property is a community revitalization property as defined in The Community Revitalization Tax Increment Financing Act, disclose to the minister responsible for the administration of that Act any information, including personal information, about the rebate issued in respect of the property.

Regulations

12.9

The Lieutenant Governor in Council may make regulations

(a) prescribing, in relation to the definition "applicable percentage" in section 12.1, for one or more taxation years,

(i) a percentage greater than 25% for the purpose of clause (a), and

(ii) a percentage greater than 10% for the purpose of clause (b);

(b) respecting the payment of school tax rebates, including an administrative process for claiming an unpaid rebate;

(c) providing authority to investigate, inspect or audit any matter pertaining to a rebate;

(d) establishing a method for delivering, instead of a school tax rebate under this Part, a benefit equivalent to the rebate by way of a reduction in school taxes;

(e) respecting the reimbursement of municipalities for any benefit provided by way of a tax reduction referred to in clause (d);

(f) respecting any matter the Lieutenant Governor in Council considers necessary or advisable for the purposes of this Part.

3

Section 14 is amended

(a) in the part before clause (a),

(i) by striking out "1992" and substituting "2020", and

(ii) by striking out "least of" and substituting "lesser of"; and

(b) by replacing clauses (a) to (c) with the following:

(a) the amount by which the occupancy cost, as defined in subsection 5.3(1) of The Income Tax Act, of the pensioner tenant for the year exceeds the total of the education property tax credit and the seniors' school tax rebate of the pensioner tenant for the year; and

(b) the applicable percentage of the lesser of

(i) $175 minus 2% of the amount by which the individual's family income for the year, as defined in subsection 5.3(1) of The Income Tax Act, exceeds $15,000, and

(ii) the amount by which 10% of the rent paid on the pensioner tenant's principal residence for the year exceeds $160.

For the purpose of clause (b), the applicable percentage is 100% minus the percentage for the year under clause (a) of the definition "applicable percentage" in section 12.1.

4

Section 14.1 is repealed.

5

Subsection 16.1(1) is amended

(a) by replacing the definition "applicable percentage" with the following:

"applicable percentage", in relation to any taxation year after 2020, means the percentage determined by the following formula:

80% × (100% − A)

In this formula, A is the percentage for the year under clause (a) of the definition "applicable percentage" in section 12.1. (« pourcentage applicable »)

(b) in the French version, by replacing the definition "« occupant », « personne », « propriétaire inscrit » et « propriétaire véritable »" with the following:

« occupant », « personne », « propriétaire inscrit » et « propriétaire véritable » S'entendent respectivement au sens d'« occupant », de « personne », de « propriétaire » et de « propriétaire véritable » de la Loi sur l'évaluation municipale. ("occupier", "person", "real owner" and "registered owner")

6

Subsection 16.2(1.1) is replaced with the following:

Maximum for total of all rebates

16.2(1.1)

The total of all rebates received or assigned under this Part for a taxation year after 2020 by a taxpayer and every person to whom the taxpayer is related must not exceed the amount determined by the following formula:

$5,000 × (100% −A)

In this formula, A is the percentage for the year under clause (a) of the definition "applicable percentage" in section 12.1.

7(1)

Subsection 16.8(1) is amended

(a) by repealing clause (c); and

(b) by replacing clause (c.1) with the following:

(c.1) for the purpose of subsection 16.2(1.1), prescribing circumstances in which persons are deemed not to be related;

7(2)

Subsection 16.8(2) is repealed.

PART 2

INCOME TAX CREDITS AND REBATES

C.C.S.M. c. I10 amended

8

The Income Tax Act is amended by this Part.

9(1)

Subsection 5.3(1) is amended

(a) by adding the following definition:

"applicable percentage", in relation to a taxation year, means

(a) for a taxation year before 2021, 100%,

(b) for the 2021 taxation year, 75%, and

(c) subject to the regulations, 75% for each taxation year after 2021; (« pourcentage applicable »)

(b) in the part of the definition "dwelling unit cost" before clause (a), by adding "the applicable percentage of" after "means".

9(2)

The following is added after subsection 5.3(1):

Applicable percentage reduced by regulation

5.3(1.1)

For the purpose of the definition "applicable percentage" in subsection (1), the Lieutenant Governor in Council may, by regulation, prescribe a percentage less than 75% for a taxation year after 2021.

10(1)

Clause 5.4(3)(a) is replaced with the following:

(a) the lesser of

(i) the individual's occupancy cost for the year, and

(ii) the applicable percentage of $700;

10(2)

Clause 5.4(4)(b) is amended by replacing the description of A in the formula with the following:

A

is the lesser of the individual's occupancy cost for the year and the applicable percentage of the amount determined by the following formula:

$1,100 − C

In this formula, C is the lesser of $400 and 1% of the individual's family income for the year;

10(3)

Subsection 5.4(6) is repealed.

11(1)

Subsection 5.5(2) is replaced with the following:

School tax credit

5.5(2)

An individual's school tax credit for a taxation year is the lesser of

(a) the amount, if any, by which the individual's occupancy cost for the year exceeds the total of the following amounts:

(i) the individual's education property tax credit for the year,

(ii) the total of all amounts each of which is the school tax reduction given in respect of a principal residence of the individual for the year or a part of the year,

(iii) the seniors' school tax rebate, if any, claimed for that year by the individual or the individual's cohabiting spouse or common-law partner; and

(b) the applicable percentage of the amount determined by the following formula:

$175 − A

In this formula, A is 2% of the amount, if any, by which the individual's family income for the year exceeds $15,000.

11(2)

Subsection 5.5(3) is repealed.

12(1)

Subsection 5.5.1(5) is replaced with the following:

Seniors' school tax rebate

5.5.1(5)

The seniors' school tax rebate for a taxation year of an individual who is eligible for the rebate is equal to the amount determined by the following formula:

A − .02B

In this formula,

A

is the lesser of

(a) the applicable percentage of $470, and

(b) the amount, if any, by which

(i) the applicable percentage of the school tax for the year in respect of the individual's principal residence,

exceeds the total of

(ii) any education property tax credit that could be claimed for that year by the individual or the individual's cohabiting spouse or common-law partner in respect of the individual's principal residence, and

(iii) any school tax reduction for the year in respect of the individual's principal residence;

B

is the applicable percentage of the amount, if any, by which the individual's family income exceeds $40,000.

12(2)

Subsections 5.5.1(6) and (7) are repealed.

13

Subsection 5.6(1) is replaced with the following:

School tax reduction

5.6(1)

Subject to subsection (1.1), the school taxes imposed for a calendar year in respect of the principal residence of an individual who is, or whose spouse or common-law partner is, its assessed owner are to be reduced by the applicable percentage of the lesser of

(a) $700; and

(b) the amount of the school taxes that, but for this subsection, would be imposed in respect of the property for that year.

PART 3

RELATED AMENDMENTS

C.C.S.M. c. C166 amended

14(1)

The Community Revitalization Tax Increment Financing Act is amended by this section.

14(2)

Subsection 11(1) is amended by adding "other than a property exempted from the levy by regulation" at the end.

14(3)

Subsection 16(1) is amended by adding the following after clause (c):

(c.1) exempting a community revitalization property from the community revitalization levy;

14(4)

Subsection 16(2) is amended by striking out "clause (1)(a) or (b)" and substituting "clause (1)(a), (b) or (c.1)".

C.C.S.M. c. M225 amended

15

The Municipal Act is amended by adding the following after subsection 302(1):

Material with tax notices

302(1.1)

Tax notices sent out under subsection (1) must include or be accompanied by any tax-related printed information or material supplied by the minister. But the information or material must not include the name, image or title of a member of the Executive Council.

C.C.S.M. c. R119 amended

16(1)

The Residential Tenancies Act is amended by this section.

16(2)

The following is added after subsection 120(2):

Rent freeze for 2022 and 2023

120(3)

Despite subsection (2) and the regulations,

(a) no increase in the rent charged for a rental unit is permitted by subsection (2) during the two-year period beginning on January 1, 2022; and

(b) the maximum increase permitted by the regulations during the two-year period is deemed to be nil for the purpose of applying subsection 123(2) in 2022 and 2023.

Information Note

This two-year rent freeze does not prohibit a landlord from increasing the rent in 2022 or 2023 as permitted by an order made under section 123.

16(3)

Subsection 125(3) is amended by adding the following after clause (b):

(b.1) any rebates, incentives or grants or other benefits, including rebates under The Property Tax and Insulation Assistance Act, received or receivable by the landlord in relation to the services, facilities, privileges or accommodations that the landlord provides for the tenants;

Manitoba Regulation 113/2006 amended

17

Subsection 2(1) of the School Tax Reduction Regulation (L.G.D. of Pinawa), Manitoba Regulation 113/2006, is amended

(a) in the part before clause (a), by adding "the applicable percentage of" before "the lesser of"; and

(b) by adding the following after clause (b):

For this purpose, "applicable percentage" means the percentage for the year under the definition "applicable percentage" in section 12.1 of The Property Tax and Insulation Assistance Act.

Manitoba Regulation 27/2021 repealed

18

The School Tax Reduction (2021) Regulation, Manitoba Regulation 27/2021, is repealed.

PART 4

COMING INTO FORCE

Coming into force

19

This Act comes into force on the day it receives royal assent.