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Calgary business: Potential TIPP increase isn’t a city tax spike

The jump some Calgary businesses are seeing in their monthly Tax Instalment Payment Plan (TIPP) notices doesn’t mean their taxes are increasing by that much, the city said.  

If you have questions, however, you aren’t alone.

Confusion over increased payment amounts, especially in light of recent budget adjustments at Calgary city hall, the tax shift changes and the cessation of the Phased Tax Program (PTP) rebate (which protected businesses from steep increases in 2017, 2018 and 2019), has some businesses worried they’re on the hook for more.

This obfuscation led Calgary property tax specialist John Smiley to post an explanation on LinkedIn, based on questions from his own clients.  

“We had significantly more calls this year than in years past,” Smiley told LiveWire Calgary.

Smiley said the biggest impact is the PTP from 2019. That program hasn’t yet been extended into 2020.

“And that’s the primary reason why they’re seeing TIPP payments go from $10,000 to $17,000, $20,000 to $33,000,” he said.

“This looks like a huge tax increase despite being told that some of the burden was being shifted to residential taxpayers. Of course, it’s something completely different. But that doesn’t change the user experience of writing a $10,000 cheque for property tax for the last four months and a $17,000 cheque for property tax for each of the next six months.”

Most TIPP accounts will see decrease or stay the same: City

Still, at least one city councillor used it as an opportunity to target a lack of spending cuts at city hall during the latest budget adjustment.

While there may be some future tax implications (increase, decrease, stay the same) for Calgary businesses based on the tax shift and the end of the PTP and future property assessment, these fluctuations occur annually. The recent TIPP calculation has nothing to do with the recent One Calgary 2020 budget adjustment.

According to Michael Perkins, Manager Tax, Receivables and Accounts Payable with the City of Calgary, most TIPP participants will see no change (or a decrease) in their monthly payments.

Perkins said of the 278,000 TIPP accounts in Calgary, 19,000 will see their payments increase on Jan. 1, 2020.  A further 91,000 will see a decrease, and 168,000 will see no change at all.

Calgary TIPP increase ≠ tax increase

Does that mean the TIPP clients who see a decrease in their monthly payment then get a tax decrease, too? No, said Perkins.

“There are no tax rates for 2020 known at this point, it does not reflect anything that we anticipate to occur in 2020. It’s simply math based on what has occurred in 2019,” Perkins said.

“What occurred in 2019 projected forward for the first six months 2020 and it’s purely coincidental that it aligns with the budget discussions going on at City Hall.”

After the first six months of 2020, the city’s latest non-residential tax rate will be known (April/May), assessments will have been done, council may or may not decide on a PTP for 2020, and then a recalculation occurs for the remainder of the year.

With all the apparent confusion, Perkins said they haven’t been overwhelmed with more calls from Calgary businesses. He said the PTP has been ongoing for three years now, and TIPP recalculations happen at the same time every year.

The City of Calgary has more information describing how the TIPP program works and the annual recalculation, so business owners understand the process for the calculation. There’s a handy little quick-guide below.

TIPP Illustrative Examples by Darren Krause on Scribd

There has been no decision made yet on a potential PTP for the 2020 tax year.