Small business owners in B.C. balk at unexpected property tax change

“You have to sell a heck of a lot more to pay a little more in overhead.” — Murray Fraser, a business owner facing an increase of more than $15,000 in property taxes.

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Murray Fraser got his first snowboard at a ski show in Las Vegas and learned to snowboard at Cypress Bowl in 1986. He opened one of the first specialty snowboard shops in Vancouver the next year and later moved into a 5,000-square-foot location on Fourth Avenue.


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The Boardroom, which sells snow, skate, wake and surf equipment, has grown over the decades and had to deal with property tax increases, but nothing like this.

It is among a set of businesses in Victoria, Vancouver and elsewhere that are unexpectedly — and without consultation — losing their ability to claim property tax relief on air space, which is the right to build into the vertical space above a property.

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It’s a difference that will mean a 35 per cent increase in Fraser’s property taxes from $45,745 in 2021 to $61,634 in 2022, a $15,889 hike.

“My business isn’t going to go out of business based on a $15,000 additional cost, but it’s getting harder and harder,” said Fraser.

Increases to minimum wage and medical services plan payments have squeezed margins more tightly.


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“People might think, ‘let’s just spread that amount over 12 months, but if you have a profit margin of five per cent, then you need to sell about $300,000 more,” to pay for that additional $15,000 in property taxes.

“You have to sell a heck of a lot more to pay a little more in overhead.”

The provincial government is offering impacted properties a one-year only temporary exemption on the School Tax they pay.

But it’s small comfort in exchange for losing what Ryan Tung, property tax principal of global tax firm Ryan LLC, describes as “some fairness” for these businesses in recent years.

Since around 2017, some Vancouver commercial property owners, looking to reduce property taxes, which are typically borne by their tenants, have gone through the courts to get so-called “split assessments.”


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It essentially means that yet-to-be-built, potential condos in the airspace over a property are taxed at the lower residential rate. This is instead of the entire property, including currently empty airspace, being taxed at a higher commercial one.

“At all of these businesses, the leases are triple-net leases with the business (owners) paying the taxes,” in addition to rent and maintenance costs, said Tung.

“So there’s been good relief to be able to get about 40 per cent of the total amount (classified) as residential, with that (part of the bill) going down three times” in cost, and dramatically lowering the total amount.

Tung said the latest change comes after two cases that came before the Property Assessment Appeal Board in the past year and a half.


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They each yielded judgments that signalled a disagreement with a landmark Supreme Court decision in 2016 that paved the road for this “split assessment” that businesses use to help lower their property tax bills.

“It is a major change,” said Tung.

“The main problem we have with all this is that it’s a drastic change and, given all the manpower and all the litigation that has occurred on this issue over the past decade, it would have been nice to have level of consultation with B.C. Assessment.”

B.C. Assessment issued an email with the change on Nov. 26

Tung is a member of the Business Tax Alliance, a new advocacy group that represents over 10,000 commercial tax payers in Victoria, Vancouver and Surrey.

“The other thing is (that with more consultation), we could have advised landowners that this might be coming and people can plan ahead. People budget for taxes well before. Now, you have businesses left in the lurch.”

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