Classification of Industrial Property for Property Tax Purposes

The issue of whether an industrial property should be class 05 light industry or 06 business, became relevant a few years back when the Liberal Government reduced the tax rate (Mill rate) for the school taxes for the 05 class. In 2012 it stands at 40% which means a saving of 4 mill rates and gives 05 class a preferential tax rate in many municipalities.

Property tax to be paid is equal to the BCA assessed value divided by 1000, times the mill rate determined by the city for each class.

As the total mill rate for industrial (05) in some municipalities dropped below the (06) rate, occupants and landlords scrambled to have their classification changed. A list of the differences in the mill rates is attached for the lower mainland. It is noted that the following municipalities have higher industrial rates.

  Light Industry (05) Business (06) Difference
New Westminster 30.8024 22.6826 8.1198
North Vancouver (District) 26.73509 17.3986 9.33649
Port Moody 24.095 18.3925 5.7025

By way of example for a 30,000 sf warehouse, a change of class could result in $10,000 per annum in tax savings.

The main uses are extracting, processing, manufacturing and transportation, but excludes food products.

The interpretation of transportation is cloudy. BCA say transporting means the subject premises must be used as part of a continuum of carrying or conveying products. This includes places where goods may be temporarily stored and retrieved as part of the course of transport. But it implies a continuous journey which may be interrupted by a stop over but only for a short time in the course of passing from place to place. BC Assessment say that if a product goes to an end user, then it is not transportation. This begs the question "what is an end user?"

A warehouse where products are collected for redistribution to corner stores is transportation, but is a warehouse that sells a product such as brake pads to be placed in a car for a customer by an auto mechanic who marks up the price, sold to the end user? The same question would apply to a building supply company.

Hence, if you receive goods and transport them to another place in their original or modified form you could obtain a 05 class, provided it is not food, as all food products fall under class 06.

For further information, please contact Peter Austin at 604.733.3282, or by email at paustin@telus.net.