As noted in previous newsletters, the Additional School Tax (AST) was first applied in 2019, and is an annual tax that adds to the Residential property tax rate. The rate is 2 mills (0.2%) between $3M and $4M of taxable Assessment and 4 mills (0.4%) over $4M of taxable Assessment. It applies to Class 1 (Residential) property that is defined as “Dwelling Property”. 

Dwelling Property captures: 

• Land and airspace (which is determined to have no present use by the Assessor) that is outside of the ALR; this includes vacant land;
• Completed developments with three or fewer units if not stratified; and
• Residential strata units. 

For vacant lands under development, AST applies until there is excavation for the purposes of construction (there are some exceptions such as preloading and sheet piling).  

As the Chair of the UDI Property Tax Issues Committee reported previously, the first broad fight of AST was through bringing a test case to the Property Assessment Appeal Board (PAAB) being Musqueam’s Lelum development at UBC. There was a win at PAAB for the taxpayer, as the decision was that there could be a different lens on determining land with no present use for the purpose of classification versus application of AST. This meant that AST does not have to apply on vacant development sites that have not yet reached excavation. 

BC Assessment, as well as the Province, appealed the decision to the BC Supreme Court where the judge allowed the appeal ruling in their favor. An appeal was sent to the BC Court of Appeal where the taxpayer was granted Leave. This test case was not carried through to finality as the Musqueam received a Remission Order for the removal of AST and thus, the case was not heard at the BC Court of Appeal.  

Since the end to the Musqueam test case, industry along with BC Assessment and PAAB have coordinated to move forward with the large volume of AST appeals. All appeals have been organized into “buckets” based upon similar evidentiary background and indicia. Negotiations have ensued and some buckets have been resolved: 

• Development lands which are not quite at excavation but close to that step, albeit on a case by case basis; and
• Previously BC Assessment took the interpretation that AST still applies to properties with more than three units if there are multiple buildings and each building does not comprise four units are more; they have now accepted removing AST as long as the property comprises four units or more.

All appeals that remain outstanding are currently going through a thorough discovery stage and then subsequently, will proceed to negotiations, settlement, litigation, or withdrawal.  UDI will share further updates throughout this process.  

June 3, 2025

The Additional School Tax (AST) was introduced by the Province in 2019 as an annual surcharge on high-valued residential properties, adding to the residential property tax rate. The AST applies to Class 1 (Residential) properties defined as “Dwelling Property,” and is set at the rates of: 

• 0.2% on the portion of assessed value between $3 million and $4 million, and
• 0.4% on the portion above $4 million. 

Dwelling Properties captured by the AST include residential strata units, non-stratified developments with three or fewer units, and land or airspace deemed by BC Assessment to have “no present use” (outside of the ALR). For vacant development land, the AST generally applies until excavation begins for the purposes of construction, although limited exemptions apply (e.g., preloading or sheet piling). 

As reported previously, a key test case was brought forward by the Musqueam Indian Band for its Lelum development at UBC. The Property Assessment Appeal Board (PAAB) had originally ruled in favour of the taxpayer, determining that land with “no present use” for classification purposes could be treated differently for the application of AST – meaning AST did not need to apply to development land not yet excavated. BC Assessment and the Province appealed that decision to the BC Supreme Court, which ruled in their favour. The Musqueam were granted leave to appeal to the BC Court of Appeal; however, the case was ultimately discontinued after a Remission Order was granted to remove AST from the property. 

Since that time, the development industry has worked collaboratively with BC Assessment and PAAB to address the broader set of AST appeals that remain outstanding. The appeals have been grouped into “buckets” based on common evidentiary features and site characteristics. 

Resolution has been achieved in some buckets, including: 

• Lands that are close to the excavation stage but not quite there, where AST had previously been applied; and
• Multi-building development sites where BC Assessment initially applied AST on the basis that each building had fewer than four units. BC Assessment has now accepted that AST should not apply where the property, as a whole, comprises four or more units. 

A two-week PAAB hearing has been scheduled for July 2025 to address unresolved “bucketed” cases, including: 

• Land under active development that has not yet reached, or is not considered close to, excavation;
• Land that is currently vacant but forms part of a phased development, where other phases are already under construction;
• Multi-family development sites that currently include a tenanted single-family home; and
• Air space parcels located over commercial buildings. 

The UDI Tax Committee will continue to monitor developments closely and will provide further updates following the outcome of the hearing in July.