Assessment Practices and Procedures TAARA 1

Tourist Accommodation (Assessment Relief) Act (TAARA)

Last Document Review Date: January 4, 2017

Last Legal Review Date: January 4, 2017

TABLE OF CONTENTS

Executive Summary .............................................................................. 3

Resources ............................................................................................ 3

Legislation ................................................................................... 3

Compliance Checklist ............................................................................ 4

Tourist Accommodation (Assessment Relief) Act ....................................... 5

General ............................................................................................ 5

Exception ......................................................................................... 6

Multiple Lots – One or More Exemptions ............................................... 6

Apportioning a Single TAARA Exemption Among Multiple Properties ......... 7

Class 6 – Business and Other Properties Under Construction ................... 8

TAARA and the Industrial or Business Property Exemption ...................... 8

Strata Property Sample TAARA Calculations Within a Municipality ............. 10

Legislative Formula .......................................................................... 10

Non-Strata Property Sample TAARA Calculations Within a Municipality ...... 10

Legislative Formula .......................................................................... 10

Sample Calculation For a Single Folio ................................................. 11

Sample Coding ................................................................................ 11

Sample Calculation For Multiple Folios ................................................ 11

Sample Coding ................................................................................ 12

Sample Calculation of TAARA Apportionment Within a Strata Complex ... 13

Sample Coding ................................................................................ 14

Legislative Formula for eligible property within a rural area ................... 14

Appendix A: Frequently Asked Questions ............................................... 16

Appendix B: Legal Direction ................................................................. 17

Assessment Practices and Procedures TAARA 2

Downtown Hotel .............................................................................. 17

Legal Direction.............................................................................. 17

Simple Resort Campground ............................................................... 17

Legal Direction.............................................................................. 18

Multiple-lot Hotel ............................................................................. 18

Legal Direction.............................................................................. 18

Hotel with Long-term Stays............................................................... 18

Legal Direction.............................................................................. 18

Assessment Practices and Procedures TAARA 3

EXECUTIVE SUMMARY

The purpose of this document is to provide direction for the consistent application of the exemption available under the

Tourist Accommodation (Assessment Relief) Act (TAARA).

TAARA provides relief by reducing the assessed value of eligible property for the purpose of taxation under designated

Acts, which include the Assessment Authority Act, the British Columbia Transit Act, the Community Charter, the Hospital

District Act, the Islands Trust Act, the Local Government Act,

the Municipal Finance Authority Act, the Police Act, the School Act, the South Coast British Columbia Transportation

Authority Act, the Taxation (Rural Area) Act, the Treaty First Nation Taxation Act, the University Endowment Land Act, and

the Vancouver Charter.

RESOURCES

Legislation

Assessment Act, R.S.B.C. 1996, c. 20, sections 12, 13, 26, 57, 63 and 65

Industrial and Business Property Exemption Regulation, B.C. Reg. 485/83

Prescribed Classes of Property Regulation, B.C. Reg. 438/81

Strata Property Act, S.B.C. 1998, c. 43

Tourist Accommodation (Assessment Relief) Act, R.S.B.C.

1996, c. 454

Tourist Accommodation (Assessment Relief) Regulation, B.C. Reg. 405/88

Assessment Practices and Procedures TAARA 4

COMPLIANCE CHECKLIST

The following is a list of items that must be completed in order to be considered compliant with this document:

1. Apply the TAARA exemption to eligible Class 6 and

improvements used to provide overnight accommodation to guests.

2. TAARA exemptions to be apportioned to eligible Class 6 land

and improvements on the same basis as the valuation is split.

3. If a parcel of land falls in Class 6 but the improvements are

not used for overnight accommodation, do not provide the TAARA benefit. The reverse of this situation, where the

improvements are used for overnight accommodation but the land is not in Class 6, also cannot be provided the TAARA

benefit.

4. Where a tourism operation extends over more than one lot, provide each lot that legally qualifies as an independent

tourism operation with its own separate exemption (assuming that lot meets the qualifications for exemption).

5. Provide qualifying Class 6 properties that are under

construction, assuming the owner demonstrates a sufficient commitment to develop the land for the provision of

overnight accommodation to guests, with the TAARA exemption as soon as the construction phase has

commenced.

6. Where eligible tourist operations operate on more than one folio, including stratified tourist operations, but they only

qualify for a single TAARA exemption, you must manually calculate the TAARA exemption and manually apportion the

exemption between land and improvements.

Assessment Practices and Procedures TAARA 5

TOURIST ACCOMMODATION (ASSESSMENT RELIEF) ACT

General

Apply the TAARA exemption to Class 6 land and

improvements used to provide overnight accommodation to guests.

Where a parcel of land falls into Class 6 but has no

improvements used to provide overnight accommodation to guests, it cannot get the benefit of TAARA. Similarly,

improvements used to provide overnight accommodation to guests cannot get the benefit of TAARA in the absence of

Class 6 land. The definition of eligible property requires that land, with its improvements, be used to provide overnight

accommodation to guests.

The value attributable to the Class 6 property used for this

purpose should first be apportioned on the same basis as the property was valued1

For the purpose of determining the proportion of Class 6 land

which supports campsite/RV pad services and is eligible for an

exemption under TAARA, attribute between three and five percent of the value of the land used to provide overnight

accommodation (e.g., camping) to Class 6 depending on the quality of the site servicing. Better quality site servicing would

justify a percentage at the higher end of the range.

Class 6 property used to provide accommodation includes property that is:

o actually used to provide overnight accommodation to guests (e.g., hotel rooms).

o necessarily ancillary to the provision of overnight accommodation to guests (e.g., the property is

necessary to support the overnight accommodation

1 David Robinson Ltd. v. Assessor of Area 01 – Saanich/Capital (AAB,

1988, dated April 20, 1989); and Assessment Commissioner v. Creative -

Community Developments Ltd. (1980), Stated Case 138 (B.C.S.C.). Contact Assessment Legal for assistance.

Assessment Practices and Procedures TAARA 6

such as hallways, lobbies, check-in areas, parking lots

and offices). o used exclusively by guests (e.g., a hotel swimming pool

or tennis courts).

Subject to the exception set out below, a restaurant, conference centre, pub or other such area (e.g., retail space)

would not get the benefit of TAARA.

Exception

Where a Class 6 accommodation property is in a very remote

location (e.g., a fly-in resort) or the food service is included in

the price of accommodation, the restaurant or food service area would be eligible for relief under TAARA either because

the restaurant is considered necessarily ancillary to the provision of overnight accommodation to guests in the

circumstances or because the area is unlikely to have any customer base other than the guests.

Multiple Lots – One or More Exemptions

The legislation was intended to provide a single exemption to each qualifying tourism operation (e.g., eligible property).

Where tourism operations extend over more than one lot, you must determine whether each lot is eligible for the TAARA

exemption. A lot is eligible for a separate exemption if it legally qualifies as an independent tourism operation, even if

is not being run independently.2

As a general rule, you should consider a property to have an

independent business operation if it has its own business license. For instance, if there is a motel on one parcel and

cabins on a separate parcel, each having its own individual business license, each parcel is entitled to its own separate

TAARA exemption.

2 See: Toth v. Assessor of Area 17 – Penticton (AAB, August 31, 1989);

and Richter Pass Motor Inn v. Assessor of Area 17 – Penticton (AAB, November 26, 1990). Contact Assessment Legal for assistance

Assessment Practices and Procedures TAARA 7

If the tourist accommodation property operates under a single

business license, then to qualify for an additional TAARA exemption, the second or subsequent lot must:

o have its own legal access

o have separately provided and billed municipal services (e.g., water, gas electricity, sewer)

o independently comply with zoning requirements (e.g., for parking)

If these criteria are met, it does not matter whether the lots are under the same or separate ownership, or whether they

are currently operating as a single tourism operation with a single check-in desk. They should be separately assessed and

granted separate exemptions.

Apportioning a Single TAARA Exemption Among Multiple Properties

If the tourism operation qualifies for a single TAARA

exemption (i.e., the most likely scenario) and is located on more than one lot, the exemption may have to be

apportioned among the lots.

For instance, where the assessor separately assesses the separate legal parcels (e.g., because there are no

improvements extending over lot lines, or because the property is a strata hotel and the assessor is required to

separately assess each strata lot), the single TAARA

exemption will be apportioned among the legal parcels that provide overnight accommodation.

Where the improvements on a second or subsequent lot are

not directly used to provide overnight accommodation, but are only necessarily ancillary to the provision of that

overnight accommodation, the TAARA exemption should not be apportioned. In other words, the second or subsequent lot

will only qualify for a portion of the TAARA exemption if it has improvements on it that are actually used to provide

overnight accommodation. For example, if a hotel is on one

lot, and the parking lot for the hotel is on an adjacent lot,

Assessment Practices and Procedures TAARA 8

only the lot with the hotel would qualify for the TAARA

exemption and no apportionment would be necessary.3

Class 6 – Business and Other Properties Under Construction

Class 6 properties under construction may benefit from the

TAARA exemption as soon as the construction phase has commenced and the owner demonstrates a sufficient

commitment to develop the land for the provision of overnight accommodation to guests4. For more guidance on applying

the Intracorp criteria, refer to the Mixed-Use Development Land APP or contact Assessment Legal.

However, where the value of the Class 6 portion of property that will be used to provide overnight accommodation to

guests, once complete, will be such that it does not qualify for TAARA, the TAARA exemption should not be granted to a

partially complete tourist accommodation property.

NOTE

Be aware that the thresholds for TAARA exemption are different

depending on whether the property is located in a municipality or in a rural area.

TAARA and the Industrial or Business Property Exemption

The Industrial and Business Property Exemption Regulation,

B.C. Reg. 485/83 exempts Class 4 – major industry, 5 – light industry or Class 6 improvements on a parcel of land up to a

maximum of $10,000 of the improvements’ assessed value.

This exemption will be reduced by the amount of the TAARA exemption granted to Class 6 improvements, which are used

to provide overnight accommodation to guests.

If the TAARA exemption for the Class 6 improvements is more than $10,000, then the exemption under B.C. Reg. 485/83

does not apply. If the TAARA exemption for the Class 6

3 This is based on a direction contained in a July 20, 1988 All Area Assessors’ memo from John Collins.

4 Assessor of Area 10 – Burnaby/New Westminster v. Intracorp Developments Ltd. (2000), Stated Case 416 (B.C.C.A.)

Assessment Practices and Procedures TAARA 9

improvements is less than $10,000, the exemption under B.C.

Reg. 485/83 applies, but only to the extent necessary to top up the exemption amount to $10,000. If no TAARA exemption

applies, the exemption under B.C. Reg. 485/83 will apply to the full extent of $10,000.

If the Class 6 accommodation property is stratified, the

TAARA exemption will be apportioned among the strata lots in the complex. The $10,000 exemption under B.C. Reg. 485/83

is applicable to the improvements on each strata lot (i.e., this exemption is not apportioned between the strata lots), but

will still be reduced by the amount of the TAARA exemption

allotted to the improvements on each strata lot. Where property is stratified, these two exemptions operate together

so that any Class 6 strata lot should receive a minimum exemption of $10,000 provided the improvement value is at

least $10,000.

Assessment Practices and Procedures TAARA 10

STRATA PROPERTY SAMPLE TAARA CALCULATIONS WITHIN A

MUNICIPALITY

Legislative Formula

A = B (C/D) where,

A = amount of the TAARA exemption,

B = the smaller of the following amounts:

(a) $150,000 less 15 percent of the amount by which the total of the assessed values of all the strata lots

included in the strata plan that are eligible property, is over $2,000,000;

(b) 50 percent of the total of the assessed values of all

the strata lots in the strata plan that are eligible property,

C = the assessed value of the eligible property, and

D = the total of the assessed values of all the strata lots included in the strata plan that are eligible property.

Section 2(3) of the Act states:

If the amount determined under subsection (1) or (2) in respect of an eligible property is a negative amount, no

change is to be made in the assessed value of the eligible property.

NON-STRATA PROPERTY SAMPLE TAARA CALCULATIONS

WITHIN A MUNICIPALITY

Legislative Formula

The reduction in the assessed value of the eligible property is the lesser of the following amounts:

a. $150 000 less 15 percent of the amount by which the

assessed value is over $2,000,000;

Assessment Practices and Procedures TAARA 11

b. 50 percent of the assessed value.

Sample Calculation For a Single Folio

Example: Conventional hotel where the actual value (AV) of eligible property (Class 6 property used to provide overnight

accommodation to guests) is $850,000 (with a hypothetical

split of 30 percent to land value and 70 percent to improvement value).

Calculation “a”: $150,000 …since hotel AV is less than

$2,000,000

Calculation “b”: $850,000 x .5 = $425,000

Total TAARA exemption = $150,000 (lesser of “a” or

“b”)

Portion of TAARA exemption applicable to land = ($255,000/$850,000) x $150,000 = $45,000

Portion of TAARA exemption applicable to improvements = ($595,000/$850,000) x $150,000 = $105,000

Industrial and Business Property Exemption Regulation, B.C.

Reg. 485/83: no exemption applies since the TAARA exemption applicable to the improvement value exceeds

$10,000.

Sample Coding

Where the eligible property is on a single folio, the system will automatically split the exemption between the land and

improvements, provided you:

o apply Class 6 and exempt tax code 08 – tourist accommodation to the eligible property.

o apply the appropriate property class and exempt tax code to the remainder of the property.

Sample Calculation For Multiple Folios

Example: Conventional hotel on two folios where the actual

value (AV) of eligible property (Class 6 property used to

Assessment Practices and Procedures TAARA 12

provide overnight accommodation to guests) on Lot A is

$500,000 and on Lot B is $1,000,000 (with a hypothetical split of 30 percent to land value and 70 percent to

improvement value).

Calculation “a”: $150,000 … since hotel AV is less than $2,000,000

Calculation “b”: $1,500,000 x 0.5 = $750,000

Total TAARA exemption = $150,000 (lesser of “a” or “b”)

Portion of TAARA exemption applicable to Lot A =

($500,000/$1,500,000) x $150,000 = $50,000

Portion of TAARA exemption applicable to Lot B =

($1,000,000/$1,500,000) x $150,000 = $100,000

Portion of TAARA exemption applicable to land on Lot A = ($150,000/$500,000) x $50,000 = $15,000

Portion of TAARA exemption applicable to improvements on Lot A = ($350,000/$550,000) x $50,000 = $35,000

Portion of TAARA exemption applicable to land on Lot B

= ($300,000/$1,000,000) x $100,000 = $30,000

Portion of TAARA exemption applicable to improvements

on Lot B = ($700,000/$1,000,000) x $100,000 = $70,000

Industrial and Business Property Exemption Regulation, B.C.

Reg. 485/83: no exemption applies since the TAARA exemption applicable to the improvement value on both lots

exceeds $10,000.

Sample Coding

Where the eligible property qualifies for a single TAARA exemption and is on more than one folio, you must manually

calculate the TAARA exemption and manually apportion the exemption between land and improvements as above.

Assessment Practices and Procedures TAARA 13

o Apply Class 6 and exempt tax code 94 – tourist

accommodation strata exemption to the eligible property as an override.

o Apply the appropriate property class and exempt tax code to the remainder of the property.

o Do not apply exempt tax code 08 – tourist accommodation in these circumstances.

Sample Calculation of TAARA Apportionment Within a Strata Complex

Example: Strata hotel unit (C) where the actual value (AV) of the eligible property (Class 6 property used to provide

overnight accommodation to guests) is $100,000 ($80,000 for the improvement value and $20,000 for the land value).

Strata hotel complex (D) where the actual value of all the

eligible property in the 22-unit complex is $2,200,000.

Solving for “B”:

$150,000 – (($2,200,000-$2,000,000) x 0.15) = $150,000 – $30,000 = $120,000 …this amount is

smaller than 50 percent of $2,200,000.

Solving for “A”:

$120,000 x ($100,000/$2,200,000) = $120,000 x

0.045 = $5,400.

Portion of TAARA exemption applicable to individual

strata hotel unit (C) = $5,400

TAARA exemption applicable to land = ($20,000/$100,000) x $5,400 = $1,080

TAARA exemption applicable to improvements = ($80,000/$100,000) x $5,400 = $4,320

Industrial and Business Property Exemption Regulation, B.C.

Reg. 485/83: $10,000 – $4,320=$5,680.

Assessment Practices and Procedures TAARA 14

Sample Coding

Where the eligible property (a strata complex) qualifies for a

single TAARA exemption and is on more than one folio, you must manually calculate the TAARA exemption and manually

apportion the exemption between land and improvements as

above.

o Apply Class 6 and exempt tax code 94 – tourist accommodation strata exemption to the eligible

property as an override. o Apply the appropriate property class and exempt tax

code to the remainder of the property. o Do not apply exempt tax code 08 – tourist

accommodation in these circumstances.

Legislative Formula for eligible property within a rural area

A = B (C/D) where,

A = amount of the TAARA exemption,

B = the smaller of the following amounts:

(a) $500,000 less 15 percent of the amount by which the

total of the assessed values of all the strata lots included in the strata plan that are eligible property, is over $4,000,000;

(b) 50 percent of the total of the assessed values of all the

strata lots in the strata plan that are eligible property,

C = the assessed value of the eligible property, and

D = the total of the assessed values of all the strata lots

included in the strata plan that are eligible property.

Section 2(3) of the Act states:

If the amount determined under subsection (1) or (2) in

respect of an eligible property is a negative amount, no change is to be made in the assessed value of the eligible

property.

Assessment Practices and Procedures TAARA 15

NOTE

The sample calculations provided in the previous sections for strata and non-strata properties within a municipality can be re-

calculated using the appropriate formula above to calculate the exemptions for strata and non-strata properties within a rural

area.

Assessment Practices and Procedures TAARA 16

APPENDIX A: FREQUENTLY ASKED QUESTIONS

Question

What Class 6 land will get the benefit of TAARA?

1. Answer

Only that Class 6 land with Class 6 improvements that are

o actually used to provide overnight accommodation to guests (e.g., a hotel),

o ancillary to the provision of overnight accommodation (e.g., showers), or

o used exclusively by the overnight guests,

will get the benefit of TAARA.

Question

If a property used to provide overnight accommodation to

guests has only de minimus improvements (e.g., a rustic

campground), do those improvements and the associated land it qualify for TAARA?

2. Answer

No. Because de minimus improvements are ignored, there

would be no Class 6 land associated with these improvements and therefore nothing to attract TAARA.

Question

Does TAARA apply to property used as a marina?

3. Answer

If the marina is used to provide overnight accommodation to

guests (i.e., the boaters tie up and stay overnight), TAARA can be applied to the Class 6 land and improvements which

are used for overnight accommodation (e.g., wharves and docks, shower or laundry buildings, office).

Assessment Practices and Procedures TAARA 17

APPENDIX B: LEGAL DIRECTION

Downtown Hotel

A 300-room, non-stratified hotel is located on one downtown

lot and is entirely within Class 6. Amenities include a swimming pool and gym for use by hotel guests only. The spa

gives preference to hotel guests but is open to the public. The hotel also has a lounge, two restaurants and several

conference rooms that are available for use by hotel guests and members of the public. A number of parking spots in the

underground lot are reserved solely for use by the hotel guests; the remainder provides pay parking for the public

whether or not they are using hotel facilities.

Legal Direction

The hotel qualifies for a single TAARA exemption. The hotel rooms and any necessarily ancillary property such as the

lobby, check-in area, designated guest parking, offices and hallways are eligible property for the purposes of TAARA.

The swimming pool and gym also qualify because they are used exclusively by the hotel guests.

The spa, lounge, two restaurants, conference rooms and

remainder of the parking lot do not qualify as eligible property and cannot benefit from TAARA.

Simple Resort Campground

The tourist accommodation operation consists of one lakefront lot and one adjoining upland lot; water lines, but

nothing else, extend across the interior lot lines. The lakefront lot contains a non-stratified, 10-unit motel with paved

parking, and the owner’s residence. Although the lakefront lot has highway frontage, there is no legal access from the

highway. The lakefront lot is accessed by an unpaved road through the upland lot. The upland lot contains a basic

campground with campsites, a few un-serviced RV pads,

unpaved roads, a hut that serves as an office, and outhouses. The motel and campground operate under one business

license.

Assessment Practices and Procedures TAARA 18

Legal Direction

If the only improvements extending across the lot lines are water lines, then the lots should be separately assessed.

Apportion a single TAARA exemption between the two lots, applying it to all the Class 6 land and improvements, which

in this instance, are all necessarily ancillary to the provision of overnight accommodation (e.g., the motel

parking lot, the office, access roads shared by campers

and motel guests).

Multiple-lot Hotel

The property is comprised of two adjacent lots with a

separate hotel building on each lot. The lots have separate municipal services and separate parking lots. The municipality

issued a separate business license in respect of each lot, but the buildings have been joined by a passage on the second

floor. The second lot has a pub with rooms above which can only be accessed through the first lot. The first lot contains

hotel rooms, a lobby, restaurant and lounge.

Legal Direction

Assess the two lots separately and grant a TAARA exemption to each lot.

Apply the TAARA exemption to the hotel rooms and any

necessarily ancillary property such as the lobby, check-in area, parking, offices and hallways.

The pub, restaurant and lounge do not qualify as eligible property and cannot benefit from TAARA.

Hotel with Long-term Stays

A 100-room hotel with a restaurant and gym extends across two lots. Both the gym and restaurant are available for use by

the public as well as the hotel guests. Twenty-five of the hotel rooms are dedicated to long-term (e.g., monthly) stays.

Legal Direction

Assess the two lots as a single parcel because the hotel

extends across the interior lot line and apply a single TAARA exemption.

Assessment Practices and Procedures TAARA 19

Place the area of the hotel designated to long-term stays

(along with a proportionate amount of land) in Class 1 – residential.

The remaining rooms and necessarily ancillary property such as hallways, check-in area, offices, parking and lobby

should be placed in Class 6 and will qualify as eligible property for the purposes of TAARA.

The gym and restaurant will not qualify for the TAARA exemption because they are not used exclusively by the

hotel guests.