New Property Tax Framework for Alberta Data Centres

Alberta’s Minister of Technology and Innovation has announced a new framework standardizing the approach to property taxation for large data centres in the province. The framework is comprised of two key elements:

• Large grid-connected data centres of 75 megawatts or more that will be categorized as Designated Industrial Property; and

• As of December 31, 2026, these properties will be subject to a new 2% levy on computer hardware.

The levy was announced immediately following a six-week consultation period. While complete details on the levy have not yet been released, many industry participants have expressed concerns. The computer hardware needed to establish a data centre is a significant component of its initial cost. Although the levy would be deductible from corporate income tax, this deduction would not be beneficial until the data centre becomes profitable. Indeed, some properties might never generate sufficient profit to take advantage of the offset.

As Designated Industrial Property, data centres will fall under the jurisdiction of the provincial assessor. While property tax will not be assessed on computer hardware, the land and buildings associated with the data centre will continue to be subject to assessment and taxation. Because property tax will be assessed in addition to the 2% levy on computer equipment, it will be important to review the assessments carefully to ensure they are accurate and equitable.

The Minister has indicated that the province continues to investigate options to stabilize the taxation of data centres, including the potential introduction of payment-in-lieu of taxation options and deferral programs. In addition, municipalities continue to have the ability to offer property tax incentives or deferrals of up to 15 years on the property taxes for land and buildings.

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.