Last Spring, the Manitoba government announced some changes to the property taxes, but there was no big announcement, so even someone like me who tries to stay on top of tax changes didn’t even catch it.
Our property taxes are made up of two items. First is the municipal taxes that are paid to the municipality we live in. The second portion is the education taxes that are paid to the school division we reside it.
The first change I heard about were for the residents of mobile home parks, such as Paradise Village in the RM of Ste Anne. These residents do not own the land, but for almost 30 years, they have been able to apply for the $700 education credit to reduce the property taxes they pay at the end of October. So even though they do not own the land, they have received the property tax bill related to their own home and the total bill was reduced by $700 like the rest of us homeowners.
Effective this year, they are no longer able to apply to have the $700 credit to reduce their property taxes. They have to pay the full amount of the property tax bill by October 31stand then receive the $700 credit when they file their income taxes next Spring 2019.
So although they do eventually have the same outcome, they are “out the $700” for about six months. They have to come up with the $700 now by October 31 and get it back next Spring. For many of the residents, it may be an inconvenience, but to some residents it may be a real hardship. Some may not be able to pay their property taxes in full and may incur additional interest (1% per month) until they can pay it in full next Spring when they get their income tax refund that includes the $700 credit.
The other change to the property tax credits are for those with lower-valued homes. I only heard about this change in the past month even though the changes were quietly included in the 2018 provincial budget. Until 2019, homeowners could access the full credit amount even if they paid less than $700 in school taxes – as long as their school taxes and municipal taxes combined were over the $700 threshold. Some residents paid only $250 for their total property tax bill (the minimum charge). Not anymore.
Effective 2019, if the education portion of the property taxes is less than $700, the municipal taxes will not be reduced. There are some examples of residents that have seen their net property taxes increase from $250 to over $700. It’s estimated about 25,000 Manitobans are affected by these changes.
I have seen a few media reports that have reported the changes and have called them a tax increase on the poor. That is not quite correct. I agree it may be a hardship to have to pay the full amount now, but once the 2019 income taxes are filed next Spring, the credit will be paid as a refundable tax credit on the income taxes. So the net amount is the same, it will just take six months to get the credit back. And any unpaid amount at the municipal office will be charged interest: likely 1% per month. From what I see on the Manitoba tax assistance office website, the calculations on the income tax form for 2019 has not changed, so overall the outcome is the same. You will just need to wait for the credit with your income tax refund.
The usual School tax credit for homeowners or tenants 55+ and family income less than $23,800 has not changed. And the Seniors’ School Tax Rebate (up to $470) has not changed either. I’ll try to find out why the government chose to go this route and upset many seniors and many low income seniors if the net outcome is the same. Has the government saved money in their tax office by reducing the number of staff that handled this in the past? We’ll have to wait and see what happens next tax season.
If you are looking for a group of people to talk with about death and taxes; join me, “the Death and Tax Lady”, for an open conversation about “Life and Death” at an upcoming seminar we are in the planning stages for an event some time at the end of October. Call us to be put on the invitation list so when we have more details we can invite you.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Clearview Co-op) or email@example.com