Payments in Lieu of Taxes (PILT) Program
Background
Under section 125 of the Constitution
Act, 1967, the Government of Canada is exempt from local taxation. But as one of the largest
property owners in Canada, its facilities can place a heavy demand on municipal services.
Therefore, beginning in 1950, the Government of Canada made payments in lieu of property taxes to municipalities
to share in the costs of local governments where it owns property. The payments were made under the
provisions of the Municipal Grants Act, then the updated Municipal Grants Act, 1980 and more recently
under the Payments in Lieu of Taxes Act, 2000.
The program has distributed billions of dollars to Canadian taxing authorities
since it began more than 50 years ago. These federal payments are essential
to the taxing authorities that receive them and they demonstrate the Government
of Canada's commitment to local communities and to paying their fair share of local costs.
Modernizing the Program
In 1998, the Minister of Public Works and Government Services embarked
on a series of roundtable consultations with mayors, municipal officials
and other stakeholders across Canada, to solicit input with
a view to modernizing Canada's payments in lieu of taxes system.
Prior to the modernization of the PILT program, the last comprehensive reform
of the Municipal Grants Act had occurred in 1980.
These consultations were very fruitful and a desire was identified to have the
federal government move toward a more equitable position in relation to taxable
property owners. The proposed changes would result in a more fair and predictable
budgetary environment for payments in lieu of taxes, and would ultimately
be beneficial to the taxing authorities, the federal government
and all Canadians.
PILT Act
The Payments in Lieu of Taxes Act
received Royal Assent on May 30, 2000 and came into force on December 2, 2000.
Changes
The new legislation changed the name of the Municipal Grants
Act to the Payments in Lieu of
Taxes Act. Among other changes to the Act, the Minister of Public Works and
Government Services Canada, at his discretion, can now pay
supplementary amounts to taxing authorities when payments are
unreasonably delayed, and make payments in lieu of taxes when
tenants on federal property default on their property tax obligation.
First Nations governments will receive treatment equal to that
accorded to other local governments under the Act.
Also, the definition of federal property was expanded and specific
sections of the Act were clarified to put the Government of Canada on a
more level playing field with taxable property owners.
These changes to the PILT Act move the Government of Canada towards a
more equitable position in relation to taxable property owners, and
provide a fairer and more predictable environment for taxing authorities,
the federal government and the citizens of Canada.
A best practices initiative with professional appraisal associations
is also underway to develop acceptable and balanced means of valuing
certain types of federal properties.
Regulations
As part of the modernization initiative for the PILT program, amendments
were proposed for the Regulations associated with the Payments in Lieu of Taxes Act. These changes affected the former
Municipal Grants Regulations, the Crown Corporation Grants Regulations
and the Interim Payments and Recovery of Overpayments Regulations
as well as Schedules I to III of the PILT Act. The new regulations
were approved by the Governor in Council on November 7, 2001 and
came into force on November 15, 2001. These regulations may be viewed
at the following sites:
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