Commercial Property Tax

BOMA Nova Scotia Calling for Property Tax Reform

December 2021

Executive Summary

As Nova Scotia municipalities draw up their first post-COVID budgets, a new focus on property taxation has emerged. The Building Owners & Managers Association of Nova Scotia (BOMA Nova Scotia) represents the commercial real estate industry; currently our members pay taxes at roughly 2.88 times the current residential rates. We look for increased fairness in distributing the taxation burden in Nova Scotia, and have developed three key recommendations:
  • Taxation Power to Nova Scotia Municipalities – We support more taxation autonomy for municipalities however with respect to the Halifax Regional Municipality (HRM) proposed taxation of geographical areas, we strongly discourage establishing tax rates based on geographical areas that is purely based on type of use or property regardless of the service level provided by the municipality. BOMA Nova Scotia does support a tiered approach to taxation based on assessed value as proposed. We also support a 3 year averaging of the assessment as proposed by the HRM but would advise the city to exclude new construction and significant capital improvements from the assessment averaging program as it may result in higher commercial tax rates over time for the remaining commercial tax base/payers.
  • Abolish the Capped Assessment Program (CAP) - The CAP qualified segment of the total global tax base is significant in size and unfairly benefits from a lower tax burden. This inadvertently shifts the tax burden to non-owner occupied residential tax-payers and the Commercial class.
  • Solidify the Equity & Uniformity provision in the Nova Scotia Assessment Act - Commercial property owners operate in a competitive space and require their assessments to be predictable, equitable, and have a uniform application. We recommend that the provincial government amend Section 42 of the Act with more concise and precise language so that assessed values are equitable with each other, and do not depend on an Assessment to Sales ratio (ASR) model as is presently the case.


BOMA Nova Scotia encompasses the majority of commercial property owners within the province involved in the leasing and management of retail (including major shopping centers), industrial, and office properties throughout the province. Our members also include institutional owners at all levels of government as well. As such, our membership is responsible for a significant amount of tax base within the province’s municipalities. In 2021, BOMA represented approximately 5.0% of the province’s total assessment base, and 16% of the province’s total commercial assessment base. If we were to include government owners who pay property taxes via grants or other methods those percentages would be even higher. We also recently took an inventory of our membership’s property tax liability and square footage under management/ownership.

Total Square footage under management: 17,050,000 sq.ft.
Total Property Tax liability: 238.1 million dollars
Total ownership companies 37

The following graphs detail BOMA’s representation within Nova Scotia’s commercial, and total assessment base in 2021:

Property tax, if not the highest, is one of the top three operating expenses for a typical property’s operating income and expense statement. As such, tax rates are a great source of concern for our membership. BOMA Nova Scotia is putting forward the following three recommendations and as these are under provincial purview or at least require provincial approvals, we invite other Nova Scotia municipalities to join us in championing change as well.

1. Taxation Power to Nova Scotia Municipalities

All properties within the province are categorized as either residential or commercial with respect to taxation. Most commercial real estate, namely shopping centers, office towers, restaurants, industrial buildings etc. all fall under the “Commercial Class” while single family, duplexes and multi-family apartment buildings fall under the “Residential Class” of property.

When comparing the two classes (for 2021), the HRM Commercial tax rate was 3.410% of the assessed value compared to 1.1189% for the Residential class. In other words, the commercial property tax rate is roughly 2.85 times higher than the residential tax rate. That means that assuming the same value, a commercial property owner will pay 2.85 times more taxes than a residential property. There has long been a tendency to push the tax load onto the commercial tax base throughout Canada and the gap between the commercial tax rate and the residential tax rate has been widening significantly. That is especially true in HRM over the past four years.

Altus Group, the country’s largest property tax consulting firm, produces an annual report in conjunction with RealPac. The excerpt below shows the ratio between the commercial tax rate and residential tax rate in Canada’s largest cities including Halifax.

As shown above, the Halifax 2021 commercial tax rate is 2.85 times the residential rate, and above the national average. This is the third year in a row where Halifax sits above the national average. If we were to include the province’s second largest municipality, CBRM, the divide would be even greater.

As shown on the chart below, the commercial tax rate in Halifax is the third highest in the country behind Quebec City and Montreal, and over the national average.

Although the city of Halifax has recently announced a significant commercial tax rate decrease totaling 1.4% over the next 2021-2022 fiscal period, the city also embarked on the following two initiatives:

HRM has been actively involved with the various commercial stakeholders over recent years in hopes of finding ways to provide relief to small business operators within the municipality. Since end of Q2 2020, small to medium sized businesses that were heavily impacted by the pandemic have been quite vocal about the advantages that “big box” retailers have over small business. The smaller businesses were often subject to complete shutdowns while larger stores could remain open for essentials. From the two proposals outlined below, it seems that City Council really does have the political will act on taxation reform with the ultimate goal of supporting small business. Item No. 11.1.2 dated May 4th, 2021 outlines the proposed taxation changes:

Assessment Averaging (3 years)

In an effort to bring more stability and predictability to the business community at a time when commercial assessment increases are more than 5% over the annual commercial tax base average, the increase in assessments are proposed to be averaged over the next 3 years. The link below illustrates the mechanism.

Highlights include:
  • Targeted to be live by February 2022.
  • Only applies to properties that are increased by 5% over the total municipal commercial increase. For example, if the avg. commercial tax base increases by 2%, the assessment will only qualify if your property increases by 7% or more (2%+5%). 
  • Will likely be implemented by the next fiscal period of 2022/2023.
  • The only possible negative impact of this program is that windfalls from high assessment increases (over 7% in this example) would be averaged over 3 years and therefore may result in a global increase of the commercial tax rate over time. In order to remedy this, we recommend that the city exclude new construction or major capital improvements from this program so that new construction increases to the tax base is not averaged over 3 years. This will stop the shift of the tax burden from new construction increases to the global tax base onto the remainder of the commercial tax base.

HRM Proposed New Tax Rate Scheme

This initiative proposed by the city we find concerning. HRM commercial and residential tax rate is currently split into 3 rates as follows:
  • Urban
  • Suburban
  • Rural
The urban and commercial rates are essentially identical while the rural rate is lower given that not all municipal services are available to that sector of the municipality. The city is exploring abolishing the 3 commercial rates and replacing them with the following rates. The new rates would be split by five zones and tiers of assessed value. Please note that this example is based on the 2020-2021 fiscal year tax rates and was taken from HRM documentation.

The Five zones are outlined on the map below and can be found in Council documentation using the link below:

For example, a commercial property assessed at 3 million located in an industrial zone would pay a rate of 2.9% for the first $500,000 of assessed value, a lower rate of 2.8% for the second tier of value (between $500,000 to $1,000,000), a rate of 2.7% for the next million of assessed value (between $1M to $2M) and finally 3.088% for anything over $2M of assessed value.
  • Based on our analysis of municipal documents, properties located in the rural zone would not be subject to any change in taxation from the prior regime.
  • Properties located in the Big Box zones (Dartmouth Crossing, specified portions of City of Lakes, Bedford Commons, and Bayers Lake Shopping District) and properties assessed over $2 million in the Industrial zones are subject to higher taxation (the other zones and tiers of value actually benefit from lower tax rates).
  • For a property assessed at $5 million in a “Big Box” zone, the increase in property taxes over the current regime would be 6.4% while a property assessed at $10 million would be subject to a 11.1% increase to their tax bill.
  • The new model would require amendment to the Regional Plan and approval from the provincial department of Municipal Affairs.
  • This initiative is in discussions only. Staff are making recommendations to Council and will revisit the plan during Fall 2021 for Council direction on this initiative.
  • This model may result in higher tax rates overall over time as the lower valued assessment thresholds will have to be subsidized by the entire commercial tax base.


  • We agree that municipalities should seek more autonomy from the province with respect to tax rates and the power to tax various sectors of its tax base. However, the proposed model of taxing geographical areas (Big Box & Industrial) at higher tax rates does not promote fair and equitable taxation. We believe it actually pits different geographical areas of the city against others resulting in discouraging development and innovation in higher taxed areas. If the city would like to provide tax relief to small business, an assessed value threshold as proposed may be agreeable.
  • The proposed tax rates at different value thresholds may result in overall increases to the tax rate as lower assessed values are shouldered by higher assessed value properties. The value thresholds will need to be revised over time.
  • The five geographical zones do not offer relief for small business as a large portion of them are located in the Big Box and Industrial zones, which are subject to higher taxation if this proposal is passed by Council.
  • Most small businesses lease space, and taxes are just another operating cost that is apportioned to tenants in most leases today. Higher tax rates will simply be passed on to small and medium sized businesses that are located in “Big Box” zones and therefore subject to higher taxation.
  • Some of the Big Box retailers are located outside the proposed “Big Box” geographical zones, which can again promote an unfair competitive advantage within the “Big Box” arena. This further amplifies that a geographical split of tax rates to try to isolate a certain asset type does not follow an equitable and fair treatment for all taxpayers. We feel this should be one of the pillars of every taxation system.
  • With respect to assessment averaging, we recommend that the city excludes new construction or major capital improvements from this program so that new construction increases to the tax base is not averaged over three years. This is to prevent a shift in the tax burden from new construction increases to the remainder of the global commercial tax base.

2. Abolish the Capped Assessment Program (CAP)

Property taxes in ALL of Canadian jurisdictions are based on some form of ad-valorem system, whereby properties that are worth more pay more in property taxes. This is the basis of a fair and transparent taxation system. As assessment authorities charged with the mass appraisal of property developed efficient methods of reflecting a more accurate current value, some segments of the tax base have been known to experience significant tax increases caused by increasing market values.

The issue became political in Nova Scotia in the early 2000’s as some homeowners, primarily seniors that have been occupying their homes for some time, felt that increasing tax bills due to higher assessed values were driving them out of their homes. Lobbying efforts were successful as the provincial government of the day enacted a law that saw eligible property taxpayers, primarily residential owner-occupiers, to be taxed on the “Capped Assessment”. Since 2004, qualified residents who own and occupy a residential property have been protected by capped assessments, with annual increases limited to the prior year CPI increase. For example, if over the prior year your assessment market value goes up by 3% due to an increase in the assessment but the CPI for the prior year is only 1%, your assessment would only increase by 1%. Since that time the Nova Scotia Federation of Municipalities (NSFM), encompassing all of 49 provincial municipalities, has been lobbying the provincial government along with other industry groups to abolish the CAP program.

Since its inception over 15 years ago, the CAP program has resulted in an inequitable spread of the tax burden to other rate payers. Here are some of the inequalities the program has delivered:
  • Since the inception of the CAP in 2004, assessed values have increased at a significantly higher rate that annual CPI resulting in a significant variance between CAP qualified taxpayers and non-CAP taxpayers.
  • All properties that have transacted since 2004 (except to a close family member) do not qualify for the CAP, therefore first-time home buyers and new market entrants share a higher burden of property taxes for the same municipal services. The CAP program no longer achieves it’s intended purpose, protecting the fixed income senior population from spikes in assessed values. Many municipalities offer other type of programs to discount property taxes for lower income taxpayers; capping assessments should not be the method of lowering individual taxpayers tax load. The NSFM has done extensive research on the subject over the years and the socio-economic implications are elaborated here:
  • The CAP-qualified segment of the total global tax base is significant, and this segment unfairly benefits from a lower tax burden. This inadvertently shifts the tax burden to non-owner occupied residential tax-payers, but more importantly further shifts the burden to the Commercial class that is already approximately 2.88 times the typical residential tax bill (of the same assessed value).
  • Any manipulation of an ad-valorem system should not be considered and is not recognized as “best practice”. It is counter-productive and defeats the purpose of an ad-valorem taxation system.


We support other industry leaders that believe the CAP program should be completely phased out as soon as possible. Given the shortfalls municipalities are facing in the post COVID-19 era, we believe the time is ripe for this antiquated program to be phased out.

3. Solidifying the Equity & Uniformity provision in the Nova Scotia Assessment Act

One common frustration appears to be the issue of fairness; an appropriate public aspiration in our view. The first thing a taxpayer will consider when determining whether their assessment and taxes are excessive is to compare theirs to that of their neighbors. The situation is no different for BOMA members with commercial real estate.

If we take two identical retail strips, one may be assessed at a different rate per square foot than the other, the first thing our members will do is compare the assessment and hence taxes on a unit of measure (per square foot) with other competing retail strips. If a competing retail strip pays less taxes, then that puts the lower-taxed strip plaza at an advantage. Tenants will also make these comparisons when contemplating where to set up shop, as they are concerned with total occupancy costs of which taxes typically represent about 15 to 25%.

The Property Valuation Service Corporation (PVSC) is responsible for the annual valuation of all of Nova Scotia’s 634,000 + accounts and as such the authority has developed robust mass appraisal techniques in order to value a large number of properties in an effective matter. It is the most sophisticated assessment authority within Atlantic Canada with the mandate to administer the Nova Scotia Assessment Act. From a quick skim of the act, one may assume that Nova Scotia does have an Equity and Uniformity provision; section 42 of the Act states:
All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that, subject to Section 45A, taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property in the municipality.
However, in practicality, the Nova Scotia Uniformity Provision has been interpreted though the courts as the “General Level of Assessment”. The term, as interpreted by the courts, can be summarized as the total of assessments of all properties in the municipality for a given class (in the case of BOMA members, Commercial), divided by the total market value of properties within the commercial class, expressed as a ratio or percentage. Practically speaking, the general level of assessment is determined by dividing the total of the assessments of ALL commercial class properties that sold in the prior year of the base date within the municipality and deriving an Assessment to Sales ratio (ASR).

BOMA Nova Scotia considers the following as shortcomings in the current Assessment Act interpretation of equity and uniformity.
  • In most jurisdictions, equity and uniformity is much more precise. If a taxpayer of an office property can prove that his assessment per square foot is assessed unfairly compared to another similar office property, those are grounds for a successful appeal. In that same scenario in Nova Scotia, the taxpayer’s office building assessment is compared with ALL of the commercial properties that sold in the prior year compared to their adjusted sale prices to achieve a median sale to assessment ratio for the municipality within the commercial tax class. The result from that equation results is the “General Level”. For HRM, that ratio has fluctuated from 92-98% over the past few years. The General Level can then be applied to the taxpayer’s market value estimate at appeal.
  • The “General Level” of assessment for the Commercial class of assessments in the majority of municipalities is calculated at 100%, due to a lack of a critical mass of sales data to derive statistical acceptable results as per the mass appraisal standard. This results in absolutely no equity and uniformity provision for those respective municipalities. Refer to the PVSC annual report below for General Level statistics:
  • Although the equity principle is stated in the Assessment Act, in practice it is very difficult to substantiate, and is often not applied by the adjudicators though the first level of appeal at the Nova Scotia Assessment and Appeal Tribunal (NSAAT).
  • The practical application of the “General Level” is subjective and requires an in-depth knowledge of a large amount of sales data that is not practical for the typical taxpayer, who may not have the expertise and resources to build a meaningful appeal case.
We do not have to go far to observe jurisdictions where equity and uniformity is adequately applied. In neighboring Prince Edward Island and in Newfoundland & Labrador, the assessment authority has to meet the market value test but also meet the equity and uniformity test with other competing properties. The market value sets the upper limit of value and taxpayers can also compare their assessments against other competing assessments as a basis for a valid appeal argument. This promotes fairness within the assessment jurisdiction.


Commercial Property owners operate in a competitive space and require their assessments to be predictable, equitable, and have a uniform application. We recommend that the provincial government amend Section 42 of the Act with more concise and precise language so that assessed values are equitable with each other, and do not depend on the current Assessment to Sales Ratio (ASR) model.