Canmore's Vacancy Tax Under Legal Fire: Understanding the Livability Tax Program and the Lawsuit Challenging It

By: Laura J. McPhee and Mark Jacka

Canmore, Alberta, has long been admired for its stunning mountain vistas, world-class outdoor recreation, and small-town charm. But beneath the postcard-perfect surface, the town has been wrestling with a critical issue: housing affordability. In response, the Town of Canmore introduced a new initiative in 2024 that’s generating a lot of discussion—both in support and opposition.

This initiative, known as the Livability Tax Program, is designed to help address the housing crisis by introducing a form of vacancy tax on properties that are not used as primary residences. Aimed at non-primary residences, the tax seeks to unlock housing stock for full-time residents and generate revenue for affordable housing projects. However, this move is now facing a significant legal challenge, with a lawsuit filed in March 2025 that questions the Town's authority to implement such a tax.

What Is the Livability Tax Program?

The Livability Tax Program imposes a higher property tax rate on homes that are not declared as primary residences. Here's how it works:

• Occupancy Declaration: All property owners in Canmore were required to submit an occupancy declaration by December 31, 2024, confirming whether their property was a primary residence. A primary residence must be occupied for at least 183 days per year, including one continuous 60-day period.

• Classification: Properties declared as non-primary—or properties for which no declaration was received—were automatically placed in a new residential (non-primary) subclass.

• Tax Impact: Non-primary residences are taxed at a higher rate, aiming to raise approximately $10.3 million in 2025 for affordable housing initiatives.

• Use of Funds: Revenue will support projects like 144 units of rental housing in Palliser, flood mitigation to unlock more housing land, and planning work for new pedestrian infrastructure and community redevelopment (Rocky Mountain Outlook, 2025).

As of the latest count, 5,848 properties were declared as primary residences (with 130 exemptions), while 1,918 were declared non-primary or did not submit declarations (RMO, 2025).

The Legal Challenge: Allegations of Overreach

On March 14, 2025, a formal lawsuit was filed at the Court of King’s Bench seeking to overturn the vacancy tax. The plaintiffs include individuals and entities such as Leslie Skingle, Ralph Young, and Three Sisters Mountain Village Properties Ltd. (RMO, 2025).

The 46-page legal filing argues that Canmore exceeded its authority under Alberta’s Municipal Government Act (MGA) by creating a property subclass based on the characteristics of property owners rather than the property itself. According to the lawsuit:

• The MGA only authorizes taxation based on the characteristics and physical condition of the property, not who owns it (RMO, 2025).

• The vacancy tax allegedly contravenes Sections 289(2), 294, 295, and 297 of the MGA, which establish that assessments should be fair, equitable, and based on property—not owner—characteristics (RMO, 2025).

• Alberta has no specific legislation enabling vacancy taxes, unlike Ontario or British Columbia, where such taxes are clearly authorized by provincial law (RMO, 2025).

The lawsuit further claims the tax improperly delegates assessment powers from the Town’s assessor to the Chief Administrative Officer (CAO), which is not allowed under the MGA. Specifically, it argues that only the assessor has authority to inspect or classify properties for assessment purposes (RMO, 2025).

Arguments from Both Sides

The Town of Canmore has not yet filed a defense, but Mayor Sean Krausert has stated the municipality will “vigorously defend” the bylaw, asserting it is in “the best interests of the community as a whole” (RMO, 2025).

Elected officials, including Councillor Joanna McCallum, emphasized that the tax revenue is earmarked specifically for non-market housing, not general expenses. McCallum framed the issue in moral terms: “Housing is a human right, so I would suggest if you have more than enough human right than you need, perhaps it’s time you share” (RMO, 2025).

Critics, meanwhile, argue that the bylaw is a form of economic discrimination that draws “arbitrary distinctions between like properties,” undermining the fairness principle upheld by the Supreme Court of Canada in previous rulings on taxation (RMO, 2025).

What's Next?

As of March 2025, the case is pending and no legal decision has been made. The outcome could set a precedent for how municipalities across Alberta—and perhaps Canada—can approach housing-related taxation in the absence of explicit provincial legislation.

More specifically, if upheld in court, Canmore’s Livability Tax Program could set a powerful precedent for other Alberta municipalities facing similar housing pressures. Without specific provincial legislation authorizing vacancy taxes, this case may clarify how far municipal powers extend under the Municipal Government Act. A ruling in Canmore’s favour could embolden other towns and cities—particularly those with high vacation home ownership rates—to introduce their own targeted tax subclasses to support affordable housing.

Conversely, if the court strikes down the bylaw, it may signal that municipalities must seek explicit provincial authority before implementing similar measures, potentially prompting calls for legislative reform at the provincial level.

Property developers and businesses across Alberta may have further concerns about Canmore’s Livability Tax Program, as vacancy taxes may deter housing investment at a time when supply is already critically constrained, particularly in high-demand regions like Canmore, where housing starts have lagged behind population growth. Increasing red tape, precedents, and polices that stymy investment in housing developments—such as the rejection of large-scale developments like Three Sisters Mountain Village, delays in development permits, and the introduction of contentious regulations like the Off-Site Levy Bylaw (which imposes charges on developers to fund infrastructure related to new growth)—as factors that collectively discourage developers and raise costs. If similar measures are adopted in other municipalities, this could lead to a chilling effect on housing investment province-wide, exacerbating affordability issues and potentially requiring provincial intervention to stabilize housing markets and protect future growth.

Time will tell what the follow-on impacts will be for Canmore’s Livability Tax Program. In the meantime, Canmore’s Livability Tax Program is active and continues to raise funds for affordable housing initiatives. Whether the tax stands or is overturned in court, the debate highlights the ongoing tension between municipal innovation and provincial legislative boundaries.