Property Tax Requests for Information: What Assessors Don’t Know Can Hurt You

In assessment jurisdictions across Canada, property taxes are charged based on the assessment authority’s estimate of a property’s market value. To estimate values, assessors need to collect information about properties from owners. The data you share, as well as how and when you share it, can have a significant impact on an organization’s tax liability. This article outlines the rules governing assessment information requests in each Canadian province and provides Ryan’s recommendations for dealing with these requests.

Information Requests

Each year, assessors across Canada mail Assessor Requests for Information (ARFIs) to owners of most multifamily, commercial, industrial, and special purpose properties. The names of these requests may vary. For example, in some jurisdictions, the request is simply called a Request for Information (RFI), while in Ontario, it is known as a Property Income and Expense Request (PIER). The timing of these requests and associated deadlines also vary widely, as do the risks associated with failing to file a response. In most jurisdictions, you will not be allowed to appeal your assessment if you do not provide all the requested information by the deadline. See the table below for an overview of request timing, deadlines, and possible penalties for each province.

The information requested by the assessor will normally include a list of rentable areas, tenants, and rents, as well as annual income and expenses for the most recent fiscal year. Even properties that are owner-occupied are required to comply with the request and provide a statement of operating expenses for the year. For industrial or regulated properties, construction costs and building plans may be required.

In addition to annual requests, certain events may trigger additional requirements. Assessors may request an opportunity to visit the property and inspect its physical characteristics because of an appeal or to prepare for a revaluation. New owners will be required to respond to requests for information about their purchases. For agricultural properties that receive the benefit of a lower tax rate, a jurisdiction may periodically send new requests for documentation of farming activity. These requests are all authorized by assessment legislation. Failing to respond to or refusing these requests could result in the same potential penalties as for annual requests, as well as missed opportunities for reduced tax rates.

Key Risks 

Many commercial taxpayers are understandably wary of releasing financial information. Others may be concerned that the data or an inspection could result in a higher property assessment. Not responding to an information request, however, increases the risk of errors in your property tax assessment and, in most provinces, will compromise your ability to file an appeal to correct the assessment.

The legislation in all provinces requires assessors to maintain confidentiality of a taxpayer’s financial data, and significant penalties may be levied for inappropriate use. The assessor’s record will not identify any actual financial information, and the data will not be released to third parties (with the exception of appeal participants, who will also be subject to confidentiality restrictions).

Contrary to the usual real estate appraisal process, property tax assessors do not rely on a property’s actual rental and expense data to arrive at an assessment. Physical information, such as tenant mix and square footage, may be relied upon, but rents, expenses, and allowances are determined based on analysis of all data provided by comparable properties in similar markets. If too few taxpayers provide this information, the data used to calculate assessments may be skewed.

Recommendations

Responding to a request for information does not guarantee that your assessment will be accurate. It does, however, ensure that you will have the right to challenge it and that you will have appropriate data to support your valuation argument.

The greater the number of property owners that provide requested data to assessment authorities, the more likely assessments will be accurate, reducing the need to challenge them and ensuring that the overall tax burden is distributed fairly.

Based on the requirements and risks outlined above, Ryan’s property tax experts have four recommendations for managing assessors’ information requests:

1. Be prepared.
   Confirm the usual date and deadline for responding to requests. Prepare the data in advance. If you don’t receive a request when expected, contact the assessor or a property tax expert for guidance.
2. Seek expert advice.
   Every property has unique considerations. Property tax experts know the requirements of each jurisdiction and can help to coordinate data sharing and develop an appeal strategy. 
3. Respond by the mandated deadline.
   There are many ways to respond: online, paper forms, and submission of internal rent rolls and income statements. Some of these methods are labour intensive and prone to error. Consider using experts to assist if needed.
4. Keep copies.
   You may have to prove that you submitted the data on time to avoid incurring a penalty. Retain copies of the data provided to substantiate compliance and facilitate review of the next assessment.

Looking for expert advice and technology to better manage your property tax obligations? Contact a Ryan representative today.

Sandi Prendergast
Director of Research, Property Tax
sandi.prendergast@ryan.com