Casual legal: Addressing issues through taxation

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated. 

By Shauna Finlay 

Reynolds Mirth Richards Farmer LLP 

Alberta Municipalities Casual Legal Service Provider  

Taxation is often used by different levels of government as a lever to incentivize or discourage certain behaviors. It can also be used to promote or address social policy issues.   

A recent case from the Alberta Court of Appeal illustrates how municipalities can also use this lever (Ross v. Canmore (Town), 2026 ABCA 73).   

In this case, the municipality had concerns about affordability within its community. One tool it decided to use to address such concerns was to allow the municipal council to reduce the tax rates for residences occupied as primary residences. In order to do this, the municipality passed a bylaw that created the following new “sub-classes” within the “Residential” assessment class: “Residential”; “Tourist Home”; “Primary Residential”, “Residential Vacant Serviced Land” and “Residential Vacant Unserviced Land”.  This allowed the municipality to set different tax rates for the sub-classes, and tax some residential subclasses at a lower rate, principally the primary residential sub-class, thus assisting with affordability for those residents using their property as their primary residence.  

This bylaw was initially challenged in a judicial review. The Court noted that (i) the bylaw was presumed to be valid and it was up to the applicants challenging the bylaw to establish it was unreasonable or outside the statutory authority of the municipality and (ii) the Court’s role was not to evaluate or judge the policy reasons for the bylaw or whether the policy objectives would be achieved by the bylaw.   

Ultimately, the Court upheld the bylaw on the basis that a reasonable interpretation of the Municipal Government Act granted the municipality authority to establish the subclasses within the Residential assessment class.   

On appeal, the Court of Appeal upheld the lower Court’s decision. In other words, the municipality was permitted to establish the various subclasses and assign different tax rates to such subclasses as a means of addressing the affordability issues the municipality had identified.   

Overall, the Court of Appeal’s decision confirms that municipalities have broad discretion under section 297(2) of the MGA to create sub-classes within the “Residential” assessment class, provided the new sub-class is intended to achieve a proper municipal objective.   

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.