Assessment Definitions

Mill Rate

Each year, municipal councils determine the amount of money they need to raise through property taxes to operate their municipality. These operating costs will be used to determine the tax rates or mill rates. A simple example to estimate the tax rate calculation is expressed in the following formula: Operating Costs / Assessment base = Tax rate.

The tax rate is applied to each individual property assessment using the following formula: Property assessment x Tax rate = Taxes payable.

This formula means that the assessed value of the property in dollars is multiplied by the tax rate set by the municipality. The result is the amount of taxes to be paid for each assessed property. A municipality may adjust its tax rate on a yearly basis depending on its revenue requirement. The tax rate a municipality chooses to set depends on the assessment base in the municipality and the amount of money it needs to generate using the property tax.

If the council requires more revenue to run the municipality and the assessment base in the municipality has remained the same, the council will have to increase its tax rate to generate the additional revenue. 

Illustration of property tax calculation

The following equations illustrate how a municipal council uses its assessment base and revenue requirements to determine the tax rate for the municipality. If the Revenue requirement is $1,000,000 and the Assessment base is $100,000,000, the tax rate is calculated as follows:

The tax rate in a municipality with this assessment base and this revenue requirement is 0.010 or 1%.

Next, the municipality applies the tax rate to each property listed on the assessment roll. For example, the tax bill for a home assessed at $85,000 would be calculated as follows; Property assessment x Tax rate = Taxes payable $85,000 X 0.010 = $850.00 The owner of a home assessed at $85,000 in this municipality would receive a property tax bill of $850.

Physical Attributes

Assessors determine property values using similar variables that real estate agents and appraisers use to establish the value of a property. These variables or property characteristics include:

  • Record of all property sales for similar properties in similar areas
  • Style of building (examples: bungalow, bi-level, store, shop)
  • Size of lot
  • Size of building
  • Year built
  • Basement finish, upper floors
  • Garage (examples: size, detached, or attached)
  • Exterior finish Building condition
  • Type of roof
  • Fireplaces, air conditioning, or other special features
  • Site or location influences (examples: golf course, lake, park, ravine, river valley, commercial, institutional, multi-family, traffic)
  • Outbuildings

Sales Comparison Approach

This approach compares a subject property's characteristics with those of comparable properties which have recently sold in similar transactions. The process uses one of several techniques to adjust the prices of the comparable transactions according to the presence, absence, or degree of characteristics which influence value.

Farming operations

As outlined in the Matters Relating to Assessment and Taxation Regulation AR220/2004, farming operations is defined as follows:

1(i.)“farming operations” means the raising, production and sale of agricultural products and includes

i.) Horticulture, aviculture, apiculture, and aquaculture,

ii.) The production of horses, cattle, bison, sheep, swine, goats, fur bearing animals raised in captivity, domestic cervids within the meaning of the “Livestock Industry Diversification Act”, and domestic camelids, and

iii.) The planting, growing and sale of sod.

Mass Appraisal

As outlined in the Matters Relating to Assessment and Taxation Regulation AR220/2004, mass appraisal is defined as follows:

1(k.)“mass appraisal” means the process of preparing assessments for a group of properties using standard methods and common data and allowing for statistical testing.

Farm Land

As outlined in the Municipal Government Act , Farm land is defined as follows:

Part 9 Division 1 section 297

(4) In this section,

(a) “farm land” means land used for farming operations as defined in the regulations;

Machinery and Equipment

As outlined in the Municipal Government Act , Machinery and Equipment is defined as follows:

Part 9 Division 1 section 297

(4) In this section,

(a.1) “machinery and equipment” does not include

(i) any thing that falls within the definition of linear property as set out in section 284(1)(k), or

(ii) any component of a manufacturing or processing facility that is used for the cogeneration of power;

Non-Residential

As outlined in the Municipal Government Act, non-residential is defined as follows:

Part 9 Division 1 section 297

(4) In this section,

(b) “non-residential”, in respect of property, means linear property, components of manufacturing or processing facilities that are used for the cogeneration of power or other property on which industry, commerce or another use takes place or is permitted to take place under a land use bylaw passed by a council, but does not include farm land or land that is used or intended to be used for permanent living accommodation;

Residential

As outlined in the Municipal Government Act residential is defined as follows:

Part 9 Division 1 section 297

(4) In this section,

(c) “residential”, in respect of property, means property that is not classed by the assessor as farm land, machinery and equipment or non-residential.

Agricultural Use Value

As outlined in the Matters Relating to Assessment and Taxation Regulation AR220/2004, agricultural use value is defined as follows:

  • the value of a parcel of land based exclusively on its use for farming operations.