Nunavut property tax arrears top $3 million

An aerial shot of the abandoned Jericho mine site, about 350 km southwest of Cambridge Bay, featured on the cover of the NIRB’s 2013-2014 monitoring report. The mine’s former bankrupt owners, Shear Minerals Ltd., owes the Government of Nunavut more than $1.5 million in unpaid property tax. (NIRB PHOTO

About 1,000 Nunavut residents and businesses outside of Iqaluit owe the Government of Nunavut $3.2 million in unpaid property taxes, and half of that is owed by a now-defunct mining company.

Shear Minerals Ltd., which, for a while, operated the Jericho mine near Contwoyto Lake in Nunavut’s Kitikmeot region, owes the GN $1,561,808 in unpaid property taxes, according to a tax arrears list published July 3 by the Department of Finance.

But it seems unlikely they’ll collect that sum, at least in the short term.

After extracting diamonds for a few months, Shear abandoned the operation. Ottawa put the mine in “care and maintenance” and then, through legal means, assumed ownership of the mine site and its assets in late 2014.

“Right now we’re just taking sort of a wait-and-see approach as far as Shear goes. It’s kind of a unique situation,” said Jeff Chown, comptroller-general for the Government of Nunavut’s finance department.

“We’re not ready yet to say that we’re not going to be able to collect the debt. We’re waiting to see how it plays out on the federal side.”

Chown said it’s unclear what Ottawa plans to do with the site. It’s possible the site may fall into private hands again, he said.

“If the site was to transfer to another entity, that entity would be responsible for taking over any taxes that were still outstanding on the site,” Chown said. “Whether we collect remains to be seen. But we’re not writing it off at this point. We’re still hopeful.”

Since the site is now officially owned by the federal government, perhaps the GN can lean on Ottawa to pay up?

“That’s not something we’d be pursuing at this time,” Chown said, once he stopped laughing.

The GN publishes its list of property tax arrears annually. Only those who own property pay such taxes.

This list does not include property tax arrears in Iqaluit because Nunavut’s capital city, the only tax-based municipal government in Nunavut, collects its own property taxes. Property owners outside Iqaluit pay tax directly to the GN.

Excluding Shear, Nunavut property owners owe about $1.6 million, 48 of whom owe more than $5,000 each.

That amount, says Chown, represents taxes dating from the creation of Nunavut, in 1999, to today.

It’s significant if you consider that the 2015-2016 territorial budget identifies $4.4 million in revenues that the government expects to collect from property taxes this fiscal year. That’s just short of what it hopes to earn from booze sales this year: $4.8 million.

Of those 48 who owe the GN more than $5,000 in property taxes, the majority — 38 — are individuals.

The remaining 10 are businesses and development corporations. Some of the biggest debtors include:

• Arviat health facility Ltd.: $20,691

• KP&H in Rankin Inlet: $17,475

• Hanavik Arts Ltd. in Arviat: $13,153

• A A McKenzie Kenmac Consulting in Resolute: $13,039

• Diamonds North Resources in Gjoa Haven: $11,871

• 953731 NWT Ltd. in Resolute Bay: $11,578

Aziz “Ozzy” Kheraj, long-time Resolute Bay business man who now owns the Arctic Haven lodge near Ennadai Lake in Kivalliq, also owes a chunk of change to the GN, according to the arrears list.

If you add up what he owes from four places — Arctic Bay, Resolute Bay, Pond Inlet and a “Hinterland” area outside of municipal jurisdictions — it comes to a total of $26,515 in property tax arrears.

In correspondence with Nunatsiaq News, Kheraj said some of that money owing is legitimate and he is resolving payment with the GN.

But some items on the list under his name are for properties he sold years ago, he said, “in some cases almost 18 years ago,” adding, “there is a mix up between land registration and taxation. It is being worked on.”

So what would all that outstanding money pay for? Chown says property taxes go into general revenues, which means they could pay for any number of things such as teacher’s salaries, community infrastructure and healthcare programs.

The government does make an effort to collect, he said. Staff send out notices by registered mail explaining how arrears can be paid in instalments if necessary and follow up those letters with phone calls to homes and businesses.

In more serious cases, the GN has the ability to put a lien on a property, sell it at auction and, in the case of government employees, withhold debts from final pay cheques when people leave the public service.

The GN also just negotiated a deal with the Canada Revenue Agency which gives them the ability to confiscate debts from income tax returns.

But sources within the finance department say they have not yet resorted to going through the CRA, nor can anyone recall the government putting a lien on a property or auctioning it off to collect property taxes.