Seven words have been added to the University Act  that will mean a new cost for on-campus businesses.

Roughly a year ago, the BC Court of Appeal interpreted section 54 of the University Act (BCLaws) to mean that commercial tenants in a student union building at the University of Victoria were not occupying space that should be subject to property tax so long as they were contributing meaningfully to student life on campus.  The property tax exemption that applies generally to spaces devoted to academic pursuits should be applied to their business premises too.

The Legislature didn’t like the outcome of that decision, and rather than appeal to the Supreme Court of Canada the province simply re-wrote section 54 to clarify that on-campus businesses should not benefit from the tax exemption – only universities should.  Here’s a comparison of the new and old versions of section 54(1):

THE OLD

(1) Unless otherwise provided in an Act, the property vested in a university and held or used for university purposes is exempt from taxation under the Community Charter, the Local Government Act, the School Act, the Vancouver Charter and the Taxation (Rural Area) Act.

THE NEW

54(1) Unless otherwise provided in an Act, the property vested in a university and held or used by or on behalf of the university for university purposes is exempt from taxation under the Community Charter, the Local Government Act, the School Act, the Vancouver Charter and the Taxation (Rural Area) Act.

The big difference?  The occupant has to be either the university or an agent of the university in order to get the exemption.  While an on-campus business could argue that the space it occupied was being “used for university purposes” (THE OLD), it will be much more difficult to argue that space is being “use by or on behalf of the university for university purposes” (THE NEW). 

Here is a helpful analysis from Clark Wilson LLP with more information on the change.  Here is a record of the change itself.

Nobody likes to pay more taxes.  We’ll soon see what impact this has on for on-campus businesses and whether anybody steps up to challenge the change.

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