Property owners in New Brunswick may be in for a surprise this March when the assessment freeze comes into effect.

New Brunswick’s assessment system has been widely covered in the media over the last year. The continued coverage can mostly be attributed to allegations surrounding mishandled assessments that have piqued the public interest. As a result, there has been significant debate and opinion both in public and government forums. Part of that coverage has focused on some recent legislation that stemmed from an assessment freeze for the 2018 assessment cycle. This is of particular interest as the 2018 assessment notices will be released in March and some owners may be surprised by their tax bills.

For those unfamiliar with the situation, in late June 2017, it was revealed that the provincial government would be freezing the 2018 assessments to match those of 2017. In December, legislation was introduced to this effect in the form of Bill 29, An Act to Amend the Assessment Act. This bill amends the Assessment Act to allow the assessment authority, Service New Brunswick (SNB), to freeze the 2018 assessments but also to make various exceptions. According to SNB’s December 5th press release*;

…there are some exceptions to the freeze which include: new construction related to a building permit; new construction and renovations without a building permit; errors or omissions of property data resulting in a correction to the 2018 valuation; real estate/property sale transactions; a change in current use/classification of the property (i.e. the subdivision of property) resulting in a change in property valuation; and a decrease in property value based on market forces.

For many, the notion of an “assessment freeze” would be welcome. However, this does not necessarily mean every property’s taxes will freeze in 2018. One reason for this is that tax rates can change year to year from location to location. In New Brunswick, the tax burden is largely comprised of both municipal and provincial tax levies applied against an assessed value. For 2018, the provincial rates are slated to stay the same but we have witnessed some increases in 2018 municipal levies in some locations. It is worth noting that New Brunswick property owners face some of the highest tax rates in the country.

Another reason some owners may experience an increase is due to the aforementioned “exceptions” to the assessment freeze. It is clear many property owners will not be benefiting from a freeze this year in their assessment. For those with an interest in reading the legislative text, Bill 29 can be found here. Unfortunately, since this is new legislation, we do not anticipate uniformity in interpretation amongst all stakeholders.

We expect the preclusions to be of particular frustration to many. For example, any property sales 2017 will be excluded from the assessment freeze. A lack of uniformity for those who acquired a property in 2017 is foreseeable should an assessment increase due to a reaction to a sale transaction. Conversely, non-transacting properties remain eligible for the freeze.

It stands to reason a taxpayer will consider whether their assessment and taxes are excessive by how they compare to the assessment and taxes of their neighbours, or competitors from a commercial perspective. This illustrates one of the biggest shortcomings of New Brunswick’s assessment system and the New Brunswick Assessment Act: we have no equity provision in New Brunswick. Creating exceptions increases the opportunity for further divide among taxpayers and as such we expect some frustration on this front.

Ultimately, we expect some New Brunswick property owners will be surprised by their tax notices in 2018 and encourage those owners to reach out to us with any questions or concerns related to your notices which are to be released in March. We are trained professionals ready to discuss the particulars of your assessments and any options that may be at your disposal.

It is worth noting that just because an assessment may be frozen it does not mean an owner is without recourse or that an appeal is not warranted. Regardless of the assessment freeze, assessments can still be appealed and we recommend engaging a tax consulting professional for any such efforts and advice. We caution that there is a 30 day appeal deadline in New Brunswick so, as always, time is of the essence.

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*http://www2.gnb.ca/content/gnb/en/news/news_release.2017.12.1556.html