Information for Municipalities Concerning Education Property Tax
Education property tax (EPT) collected by municipalities is paid to the provincial government's General Revenue Fund. The province provides each school division with its funding allocation as calculated in the PreK-12 Funding Distribution Model.
Since 2009, the provincial government has set the mill rates for EPT for all public school divisions. Some separate school divisions exercise their constitutional right to set their own mill rates, but have always adopted the provincial mill rates. The prescribed classes of property used to calculate EPT mill rates have one additional class compared to the property classes used for municipal property tax purposes. Any discounts offered by the municipality do not apply to EPT.
1. Separate School Divisions that Pass a Bylaw
Separate school boards have the constitutional right to levy mill rates by bylaw according to rules set out in provincial legislation.
Municipalities will continue to collect and remit funds to the separate school board directly when a bylaw that was passed in accordance with legislation is in place. The province will continue to fund these separate school divisions for the difference between what was collected in education property tax (EPT) and the total operating funding calculated using the pre-kindergarten to grade 12 funding distribution model.
When a municipality is collecting EPT for a separate school division that has a bylaw, the monthly and annual EPT return information must be:
- submitted in SETS (for information purposes only); and
- sent to the separate school division.
Note: Separate school divisions that set their own rates by bylaw still approve exemptions/abatements in accordance with the municipal acts.
A board of education of a separate school division that has passed a bylaw to levy mill rates is defined as an "other taxing authority" in all three of the municipal acts. Therefore, the requirement to notify/ obtain consent from an "other taxing authority" when local exemptions and abatements are granted outlined in the municipal acts applies to the separate divisions setting their own mill rates. These exemptions and abatements will not be governed by the EPT exemption and abatement process established for municipalities that remit EPT to the province.
2. EPT Returns
Monthly EPT returns are filed electronically with the Ministry of Finance. All monthly returns will be entered into Saskatchewan eTax Services (SETS). EPT returns and payment are due by the 10th of the month following the end of the monthly reporting period.
Several resources are available to aid municipalities with the monthly EPT return process:
- Instructions for Completing the Monthly EPT Return
- Reporting Exemptions and Abatements on the EPT Monthly Return
- EPT Payment Methods
- EPT Filing Correspondence
- Statement of Account Fact Sheet
Annual EPT returns are also filed with the Ministry of Finance. All annual returns will be entered into Saskatchewan eTax Services (SETS). The annual EPT return is due by January 31 of the next tax year.
Several resources are available to aid municipalities with the annual EPT return process:
- Instructions for Completing the Annual EPT Return
- Reporting EPT When Restructuring Occurs
- Recorded Webinar: Filing an Annual Return in the New SETS System
(Note: "Online Transactions" shown in webinar was renamed to "File and Pay" in updated SETS system.)
- Schedule EPT-2 (Excel)
- Schedule EPT-4 (Excel)
As a reminder, the Interim return, usually submitted in September, is no longer required.
3. Penalties and Interest for Late EPT Submissions
Monthly EPT returns are due by the 10th of the month following the reporting period. To avoid penalty and interest, submit the completed return and payment to Finance by the due date (including nil returns). Penalty and interest charges are applied to taxes that are not remitted by the due date. These charges are necessary to ensure that taxes are collected and remitted on time.
A penalty of 10 per cent of the EPT payable, to a maximum of $500 is applied to each return period. In addition, there is a $75 penalty for failure to remit a return. Interest is charged at the prime interest rate plus 3 per cent from the date the EPT was to have been remitted.
Municipalities should consider adopting a municipal bylaw or policy to authorize that EPT collected for the month can be paid by the due date rather than waiting for a council meeting. Establishing this process will help to avoid the new fines and penalties for late payment. This bylaw would be similar to what you may already have in place for payment of salaries, payroll remittances, utility billings, etc. A sample Expenditure-Authorization bylaw is available online.
4. EPT Exemptions and Abatements
The rules about granting an exemption or abatement for EPT have changed starting in the 2018 taxation year.
- Any multi-year exemptions that have been granted by a municipal council prior to January 1, 2018, under previous legislation, will continue. Existing agreements will run their course until they expire, after which the new legislation will apply. The Education Property Tax Act comes into effect January 1, 2018.
- Council may continue to enter into multi-year exemption agreements for EPT. The agreement must exempt EPT in the same percentage as municipal tax. The agreement must be for 5 years or less.
- Council may continue to use multi-year abatement policies or programs for EPT for a specified time period in accordance with the Municipal Acts.
- Municipal council can choose to exempt/abate EPT taxes in the same percentage as municipal tax on an annual basis.
- If the EPT portion of the proposed abatement/exemption for a single property or parcel of land will result in EPT loss of $25,000 or more for the tax year, the municipality must seek prior provincial approval annually. If the EPT amount is less than this threshold, no provincial approval is required.
- Multi-year agreements between the municipality and the province for exemptions and abatements (no more than 5 years) are possible, so EPT treatment is consistent with municipal property tax.
- The municipality must submit any information requested in the agreement to the province.
- The province can terminate the agreement if:
- the municipality fails to comply with the terms and conditions of the agreement; or
- the minister considers it necessary and in the public interest to do so.
- If a municipality chooses to exempt/abate more than 5 per cent of the total EPT levy within that municipality for the year, the province will undertake an audit and approval process of the abatements and exemptions given.
Note: Providing property tax exemptions will remain a local choice at this time, subject to the above approval requirements. Providing property tax exemptions means less tax revenue for essential public services, or a potential taxation shift to other properties and owners. Local governments understand the unique needs and circumstances of residents in their municipality. However, if future EPT exemption and abatement trends begin to significantly increase, causing a large loss of revenue and taxation shift, the province will reconsider the rules and thresholds established for the EPT exemption/abatement approval process.
5. EPT Exemption and Abatement Approval Process
When a municipality seeks approval from the province to exempt or abate EPT revenue that is over the $25,000 threshold or more than 5 percent of the total EPT levy, the target will be to make the decision within 15 business days after receiving all pertinent information.
Applications will be categorized into three main categories:
- Economic Development
- Housing; and
- Non-Profit/ Community based organization
A fourth category called “Other” may be used if an unusual or unprecedented circumstance arises that is not captured in one of the three main categories.
6. Request an Exemption/Abatement of EPT Equal to or over $25,000
To complete this request, follow the steps below:
- Fill out Education Property Tax Exemption/Abatement Request Form (see below).
- Fill out the appropriate Appendix (see below).
- Attach a certified copy of the resolution or bylaw for waiving the municipal tax for this property.
- Attach other documentation as required.
- Send to the Ministry of Government Relations by email at firstname.lastname@example.org.
For more details see Application Process to Request EPT Exemption/Abatement.
7. Request Approval of an Exemption/Abatement Policy that Waives 5% or More of the Total EPT Levy
To request approval, complete the steps below:
- Fill out the Request to Exempt/Abate 5% or more of the Total EPT Form and send to Government Relations by email at ept.sk.ca.
- Respond to any requests to provide more detailed information for selected properties. Additional information may be requested if:
a) One or a few properties compromise a large portion of the total exemptions/abatements proposed; or
b) Additional information is required regarding the rationale/outcomes of the exemption/abatement policy.
For more details, see Exempting and Abating 5% or More of the Total EPT Levy.
8. Reporting EPT Exemptions and Abatements to the Province
Municipalities are required to report the total dollar amount of EPT forgone due to local exemptions and abatements in Part II of the monthly EPT form. Monthly EPT returns are filed electronically with the Ministry of Finance starting with the monthly EPT return in February 2018 for taxes collected in January 2018.
Additional details regarding the properties being exempted and abated are reported each year when the annual EPT return is completed. Annual EPT returns for the 2018 tax year will be filed electronically with the Ministry of Finance.