An interesting interaction between the Government of Canada and its local authorities is the Payment In Lieu of Taxes (PILT) program. This dynamic arrangement involving the tax-exempt federal government assists municipalities and other organizations that perform local government functions.
What Is Meant by “In Lieu”?
The expression “in lieu” is actually French for the word “instead.” So, a PILT is what you pay the federal government instead of paying taxes.
What Is the Function of a PILT?
The government recognizes that its buildings benefit from municipal services such as water, roads, and garbage removal even though they don’t pay taxes. PILTs allow the government to compensate the municipalities for these services without giving up its overall tax exemption status. PILTs help municipalities who’d have to pay extra if the federal government didn’t shoulder its fair part of the load.
How to Get a PILT
It’s the municipality’s job to apply for a PILT directly to the Crown corporation (Canada Post, VIA Rail, etc.) that occupies its territory to receive the payment. PILTs replace taxes such as real property taxes, frontage or area taxes, business occupancy taxes, and service charges.
Advantages of PILTs
PILTs can be a significant source of income for cities, counties, villages, and other local authorities that host federal buildings. If you’re involved with any of these administrations, look into how PILTs are treated in your province/territory, and make sure to maximize your return.
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