Overview

Property tax on shallow gas wells and pipelines will be reduced by 35% for the 2019 tax year.

This short-term relief will help shallow gas producers cut costs, protect jobs and remain competitive in the face of economic pressures affecting the natural gas industry, while the province updates the assessment model.

Municipalities will reduce the 2019 property taxes for shallow gas properties in fall of 2019. To ensure municipalities are not impacted by lost revenue, the province will reduce the amount of education property tax they pay to the government.

Qualifying properties – about 70,000 wells and their associated pipelines – will receive about $20 million in total support.

Why it’s needed

While all property tax rates are based determined by the municipalities, the regulated assessment model used to determine the linear property well and pipelines assessments by Designated Industrial Linear Property Unit are in the 2018 Assessment Year Linear Property Assessment Minister ‘s Guidelines. These particular models have not been updated since 2005 and do not reflect the circumstances faced by many shallow gas producers with older, lower productivity assets.

The situation has been made worse by low commodity prices and other economic factors. In response, the province is offering short-term relief while it works to resolve the linear property assessment model for 2020.

How it works

A list of qualifying shallow gas wells and associated pipelines has been provided to affected municipalities and companies.

Municipalities will:

  • cancel 35% of property taxes for qualifying properties
  • report the total amount of tax cancellation to Municipal Affairs
  • continue to collect property taxes that go directly into their local budgets from shallow gas producers

The properties are predominantly found across 15 municipalities:

  • Cypress County
  • County of Newell
  • Special Areas Board
  • Wheatland County
  • Kneehill County
  • Red Deer County
  • Lacombe County
  • Rocky View County
  • Vulcan County
  • County of Stettler No. 6
  • Starland County
  • County of Forty Mile No. 8
  • Ponoka County
  • Mountain View County
  • Camrose County

Program guidelines

These guidelines provide direction to municipalities seeking funds to recoup credits provided to shallow gas properties identified on the qualifying properties list provided by the Government of Alberta.

Next steps

Municipalities that report their tax adjustments under the initiative to the province by October 21, 2019, will receive a corresponding rebate on their December 2019 education property tax requisition.