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Bill C-10

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RECOMMENDATION

His Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled ``An Act to amend the Municipal Grants Act''.

SUMMARY

This enactment amends the Municipal Grants Act to improve the fairness, equity and predictability of payments made under the Act. A statement of purpose is included. The enactment establishes an Advisory Panel to advise the Minister on disputes concerning payment amounts. It addresses the issues of compensation for untimely payments, defaults on tax obligations by certain tenants of the Crown and the bijural nature of the Canadian legal system. The enactment also makes other amendments of an administrative nature.

EXPLANATORY NOTES

Municipal Grants Act

Clause 1: The long title reads as follows:

An Act respecting grants to municipalities, provinces and other bodies exercising functions of local government that levy real property taxes

Clause 2: Section 1 reads as follows:

1. This Act may be cited as the Municipal Grants Act.

Clause 3: (1) to (4) The definitions ``assessed dimension'', ``assessed value'', assessment authority'', ``business occupancy tax'', ``effective rate'', ``federal property'', ``frontage or area tax'', ``other attribute'', ``property dimension'', ``property value'', ``real property tax'' and ``taxable property'' in subsection 2(1) read as follows:

``assessed dimension'' means the frontage, area, other dimension or other attribute of real property established by an assessment authority for the purpose of computing a frontage or area tax;

``assessed value'' means the value established for any real property by an assessment authority for the purpose of computing a real property tax;

``assessment authority'' means an authority that has power by or under an Act of Parliament or the legislature of a province to establish the assessed dimension or assessed value of real property;

``business occupancy tax'' means a tax levied on occupants in respect of their use or occupation of real property for the purpose of or in connection with a business;

``effective rate'' means the rate of real property tax or of frontage or area tax that, in the opinion of the Minister, would be applicable to any federal property if that property were taxable property;

``federal property'' means, subject to subsection (3),

      (a) real property owned by Her Majesty in right of Canada that is under the administration of a minister of the Crown,

      (b) real property owned by Her Majesty in right of Canada that is, by virtue of a lease to a corporation included in Schedule III or IV, under the management, charge and direction of that corporation,

      (c) real property subject to an emphyteutic lease to Her Majesty in right of Canada that is under the administration of a minister of the Crown,

      (d) a building owned by Her Majesty in right of Canada that is under the administration of a minister of the Crown and that is situated on tax exempt land owned by a person other than Her Majesty in right of Canada or administered and controlled by Her Majesty in right of a province, and

      (e) such real property occupied or used by a minister of the Crown and administered and controlled by Her Majesty in right of a province as is prescribed;

``frontage or area tax'' means any tax that is levied on the owners of real property and that is computed by applying a rate to all or part of the assessed dimension of real property and includes any tax levied on the owners of real property that is in the nature of a local improvement tax, a development tax or a redevelopment tax but does not include a tax in respect of mineral rights;

``other attribute'' includes

      (a) in relation to a tax levy for the purpose of financing all or part of the capital cost of a service to real property,

        (i) the actual or estimated cost of constructing a new building,

        (ii) the number of rooms, living units or beds in a building, or

        (iii) the number of persons in occupancy of a building, and

      (b) in relation to a tax levy for the purpose of financing all or part of the operating cost of a service to real property, such criteria as are prescribed;

``property dimension'' means the frontage, area, other dimension or other attribute that, in the opinion of the Minister, would be established by an assessment authority in respect of federal property as the basis for computing the amount of any frontage or area tax that would be applicable to that property if it were taxable property;

``property value'' means the value that, in the opinion of the Minister, would be attributable by an assessment authority to federal property, without regard to any mineral rights or any ornamental, decorative or non-functional features thereof, as the basis for computing the amount of any real property tax that would be applicable to that property if it were taxable property;

``real property tax'' means a tax, including a water tax, of general application to real property or any class thereof that is

      (a) levied by a taxing authority on owners of real property, or where the owner is exempt from the tax, on lessees or occupiers of real property, other than those exempt by law, and

      (b) computed by applying a rate to all or part of the assessed value of taxable property;

``taxable property'' means real property in respect of which a person may be required by a taxing authority to pay a real property tax or a frontage or area tax;

(5) New.

(6) Subsection 2(4) is new. Subsection 2(3) reads as follows:

(3) For the purposes of the definition ``federal property'' in subsection (1), federal property does not include

    (a) any structure or work that is not a building designed primarily for the shelter of people, living things, plant or personal property or, for greater certainty, any structure, work, machinery or equipment included in Schedule II,

    (b) any real property developed and used as a park and situated within an area defined as ``urban'' by Statistics Canada, as of the most recent census of the population of Canada taken by Statistics Canada, other than any real property acquired pursuant to the National Parks Act or the Historic Sites and Monuments Act or any real property that is occupied or used as a park and has been prescribed to be included in the definition ``federal property'' pursuant to paragraph 9(1)(d),

    (c) any Indian reserve, except for that part of the reserve

      (i) that is occupied for residential purposes by an employee of Her Majesty in right of Canada who would not, but for that employment, live on that reserve and that is prescribed, or

      (ii) that is occupied by or is under the administration of a minister of the Crown primarily for purposes of providing services to persons not resident on that reserve,

    (d) any real property for which an original Crown grant has not issued except to the extent that the real property

      (i) is designated for a specific use by or pursuant to an Act of Parliament,

      (ii) is reserved in the records of the Department of Indian Affairs and Northern Development at Whitehorse or Yellowknife for the use of a department or an agency of the Government of Canada and is either situated within a municipality or, in the case of real property that is not situated within a municipality, used in accordance with the reservation,

      (iii) is situated within a municipality and is reserved in the records of the Department of Indian Affairs and Northern Development at Whitehorse or Yellowknife for the use of an Indian within the meaning of the Indian Act or an Inuk, or

      (iv) is used by an Indian within the meaning of the Indian Act or an Inuk and is prescribed pursuant to paragraph 9(1)(e),

    (e) any real property that is developed or used as a public highway and that, in the opinion of the Minister, does not provide, as its primary function, immediate access to real property owned by Her Majesty in right of Canada, or

    (f) except where otherwise prescribed, any real property leased to or occupied by a person or a body, whether incorporated or not, that is not a department.

Clause 4: New.

Clause 5: Section 3.1 is new. Section 3 and the heading before it read as follows:

AUTHORITY TO MAKE GRANTS

3. (1) The Minister may, on receipt of an application in a form provided or approved by the Minister, make a grant out of the Consolidated Revenue Fund to a taxing authority applying therefor

    (a) in lieu of a real property tax for a taxation year, and

    (b) in lieu of a frontage or area tax

in respect of federal property situated within the area in which the taxing authority has the power to levy and collect the real property tax or the frontage or area tax.

(2) Notwithstanding anything in this Act, where real property is prescribed to be included in the definition ``federal property'' pursuant to paragraph 9(1)(d) or (e), a grant may be made under this Act in respect of that property for the entire taxation year in which the prescription is made.

(3) In respect of a corporation included in Schedule I, a grant may be made under this section only in respect of the real property of the corporation specified in that Schedule or prescribed by the Governor in Council.

Clause 6: The heading before section 4 reads as follows:

CALCULATION OF GRANTS

Clause 7: (1) Subsection 4(1) reads as follows:

4. (1) Subject to subsections (2) and (3) and 5(1) and (2), a grant referred to in paragraph 3(1)(a) shall not exceed the product of

    (a) the effective rate in the taxation year applicable to the federal property in respect of which the grant may be made; and

    (b) the property value in the taxation year of that federal property.

(2) The relevant portion of subsection 4(2) reads as follows:

(2) Where all or part of the real property tax levied by a taxing authority in a taxation year is for school purposes and is levied at different rates

    . . .

    (b) for taxpayers of different religious denominations and for different classes of taxable property,

there shall be substituted for the effective rate referred to in paragraph (1)(a) a rate equal to the rate calculated in accordance with subsection (3).

(3) and (4) Subsection 4(3) reads as follows:

(3) For the purposes of subsection (2), the rate substituted for the effective rate referred to in paragraph (1)(a) shall be a rate equal to the aggregate of that part of the effective rate in the taxation year that is used in determining the amount of the real property tax that is levied for purposes other than school purposes, and

    (a) if paragraph (2)(a) applies, a rate for school purposes determined by dividing

      (i) the portion of the real property tax levied for school purposes by the taxing authority in the taxation year,

    by

      (ii) the assessed value of all taxable property under the jurisdic tion of the taxing authority in respect of which such portion of the real property tax for school purposes is levied in the taxation year, or

    (b) if paragraph (2)(b) applies, a rate for school purposes for each class of taxable property determined by dividing

      (i) the portion of the real property tax levied for school purposes by the taxing authority in respect of property of that class in the taxation year,

    by

      (ii) the assessed value of all taxable property of that class under the jurisdiction of the taxing authority in respect of which that portion of the real property tax for school purposes is levied in the taxation year.

Clause 8: (1) and (2) Subsections 5(1) and (2) read as follows:

5. (1) Where, for any taxation year,

    (a) a real property tax rate is established by a taxing authority without taking into account all federal property situated within the area in which the taxing authority has the power to levy and collect a real property tax, and

    (b) the property value of the federal property not taken into account exceeds twenty-five per cent of the total assessed value of taxable property situated within the area in which the taxing authority has the power to levy and collect a real property tax,

the Minister may, in determining the amount of any grant to that taxing authority, make an adjustment in the effective rate or in any portion thereof so that the grant will not exceed the amount described in subsec tion (2).

(2) The amount referred to in subsection (1) is the amount that would have been determined by the Minister if the property value referred to in paragraph (1)(b) that is in excess of twenty-five per cent of the total assessed value of the taxable property situated within the area in which the taxing authority referred to in subsection (1) has the power to levy and collect a real property tax, had been taken into account by the taxing authority in establishing the real property tax rate for the taxation year.

Clause 9: Sections 6 to 8 read as follows:

6. (1) A grant referred to in paragraph 3(1)(b) shall not exceed the product of

    (a) the effective rate applicable to federal property in respect of which the grant may be made,

and

    (b) the property dimension of that federal property.

(2) Where a frontage or area tax is payable over a period of more than one year, the Minister may make a grant in lieu of that tax in annual instalments together with interest or in a lump sum without interest.

7. In determining the amount of a grant for a taxation year pursuant to paragraph 3(1)(a), there may be deducted

    (a) an amount in respect of

      (i) an educational service, where there is in effect a special arrangement for the provision or financing of that service by Her Majesty in right of Canada, and

      (ii) any other service, where a taxing authority, or a body on behalf of which that authority collects a real property tax, is, in the opinion of the Minister, unable or unwilling to provide federal property with a service that it normally provides to taxable property, or where there is in effect a special arrangement for an alternative means of compensating that taxing authority or body for providing that service,

    equal to the product of

      (iii) the property value in the taxation year of the federal property in respect of which the service is not provided,

    and

      (iv) the portion of the effective rate in the taxation year for that federal property that, in the opinion of the Minister, applies to that service; and

    (b) an amount that, in the opinion of the Minister, is equal to any cancellation, reduction or refund in respect of a real property tax that the Minister considers would be applicable to the taxation year in respect of federal property if it were taxable property.

8. In determining the amount of a grant pursuant to paragraph 3(1)(b), there may be deducted an amount that, in the opinion of the Minister, does not exceed reasonable expenditures incurred or expected to be incurred by Her Majesty in right of Canada to provide federal property with the service or work to which the frontage or area tax is related.

Clause 10: (1) to (3) Paragraph 9(1)(g.1) is new. The relevant portion of subsection 9(1) reads as follows:

9. (1) The Governor in Council may make regulations for carrying out the purposes and provisions of this Act and, without restricting the generality of the foregoing, may make regulations

    (a) adding to or deleting from Schedule I any corporation established by or under an Act of Parliament or performing a function on behalf of the Government of Canada that is included in Schedule III and prescribing the real property of that corporation that is to be included in Schedule I;

    . . .

    (c) adding to Schedule II any structure, work, machinery or equipment to be excluded from the definition ``federal property'' under subsection 2(3);

    (d) prescribing the real property occupied or used by a minister of the Crown and administered and controlled by Her Majesty in right of a province that is to be included in the definition ``federal property'' in subsection 2(1);

    (e) prescribing the real property referred to in paragraph 2(3)(f) that is to be included in the definition ``federal property'' in subsection 2(1);

    (f) respecting any grant that may be made in lieu of a real property tax or a frontage or area tax by any corporation included in Schedule III or IV and, without limiting the generality of the foregoing, providing that any grant that may be made shall be determined on a basis at least equivalent to that provided in this Act;

    (g) respecting any grant that may be made in lieu of a business occupancy tax by every corporation included in Schedule IV; and

Clause 11: Section 10 reads as follows:

10. The Minister may make regulations

    (a) establishing a form of application for a grant under this Act;

    (b) respecting the making of an interim payment in respect of a grant under this Act; and

    (c) respecting the recovery of any overpayments made to a taxing authority including recovery by way of set-off against other grants under this Act to the taxing authority.

Clause 12: The heading before section 11 reads as follows:

GRANTS BY CROWN CORPORATIONS

Clause 13: Subsection 11(1) reads as follows:

11. (1) Notwithstanding any other Act of Parliament or any regulations made thereunder,

    (a) every corporation included in Schedule III or IV shall, where it is exempt from real property tax, comply with any regulations made under paragraph 9(1)(f) respecting any grant that it may make in lieu of a real property tax or a frontage or area tax; and

    (b) every corporation included in Schedule IV shall, where it is exempt from business occupancy tax, comply with any regulations made under paragraph 9(1)(g) respecting any grant that it may make in lieu of a business occupancy tax.

Clause 14: New.

Clause 15: Sections 12 to 15 read as follows:

12. The Minister may enter into an agreement with the government of a province respecting the making of grants under this Act on such real property situated in the province as is prescribed pursuant to paragraph 9(1)(e) to be federal property.

13. Notwithstanding anything in this Act, federal property that, pursuant to an agreement with a province, is used as a community pasture may be excluded from the calculation of a grant in lieu of a real property tax where, with respect to that property, an alternative means of making a payment to a taxing authority in lieu of a real property tax is in effect.

14. Notwithstanding anything in this Act, where Her Majesty in right of Canada acquires taxable property, no grant shall be made under this Act in respect of that property for any part of the taxation year during which it was acquired.

15. No right to a grant is conferred by this Act.

Clause 16: Section 16 reads as follows:

16. Notwithstanding anything in this Act or any regulation made under this Act, a grant in lieu of a real property tax that may be made under this Act in respect of any real property managed or held by a port authority mentioned in subsection 10(1) or 12(2) of the Canada Marine Act shall not exceed the following:

    (a) for a taxation year beginning in 1999, 25 per cent of the grant that may, but for this section, be made under this Act;

    (b) for a taxation year beginning in 2000, 50 per cent of the grant that may, but for this section, be made under this Act; and

    (c) for a taxation year beginning in 2001, 75 per cent of the grant that may, but for this section, be made under this Act.

Clause 18: Item 10 of Schedule II reads as follows:

10. Reservoirs, storage tanks, open air swimming pools, fish rearing ponds, fishways

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