Commercial, Industrial & Multi-Residential Tax Mitigation Tools

Capping Calculation Options – Tax Ratios

In 1998, tax ratios were introduced to enable a municipality, within certain parameters, to have different tax rates for different property classes. Tax ratios are used to “weight” assessment before the tax rate calculations are made and result in different tax rates for classes of property as opposed to having the one “uniform rate”. The City must confirm these ratios every year. Any changes in tax ratios can strongly impact the other classes of taxation.

Access the by-law setting the City’s tax ratios. 

As part of the 2004 Provincial Budget Process, the McGuinty Government announced a series of reforms to Ontario’s property tax regime. These reforms included provisions to address certain shortcomings of the mechanics and nature of the tax capping system. In addition the Provincial Government also gave municipalities the tools to expedite movement towards full CVA taxation for eligible “new construction” properties. 

As part of the 2008 Ontario Budget, the Province announced additional tax mitigation tools in order to help properties achieve CVA tax more expeditiously.  Beginning in 2009 municipalities have the option to remove properties from the capping and clawback system once they have reached their Current Value Assessment (CVA) level taxes. This new tool also extends to properties that cross over between classes from 2008 to 2009 regardless of their 2008 capping/clawback treatment.  Historically in a reassessment year, properties that may have already been paying CVA tax could experience a large enough change in assessment to throw them back into the capping and clawback program. These new tools are included in the options listed below.

Capping Calculation Options – Commercial, Industrial & Multi-Residential Properties

Municipalities now have the option to use at their discretion the following:

• the ability to increase the annual cap from 5% of the previous year’s final capped taxes up to 10%;
• the option of setting a second limit for annual increases of up to 5% of the previous year’s annualized CVA taxes; and/or 
• up to a maximum $250 threshold can also be put in place to bring those properties within $250 of their CVA tax level directly to their full tax liability. The municipality may use a threshold for increasing properties, decreasing properties, or both; and/or
• the option of allowing properties who achieved CVA tax in 2008 and/or properties that cross over between classes from 2008 to 2009, the ability to leave them at CVA tax for the 2009 taxation year and beyond

These options must be reconfirmed each year through a by-law. The municipality can pick any or all options that are provided.

View the City’s capping options in the by-law.

New Construction Treatment – Commercial & Industrial Properties Only

Prior to 2005, qualified “new construction” properties received tax relief that reduced their tax liability. This meant other classes paid more than their share to protect the new construction class.

In 2005, the Province provided municipalities with a tool to limit the amount of relief provided and therefore expedite the movement towards full CVA taxation. The tax protection program could be phased-out by establishing a “floor” on tax levels. The minimum tax level could be set at 70% for 2005, 80% for 2006, 90% for 2007 and 100% for 2008 and onward.

This option must be reconfirmed each year through a by-law and the municipality can adopt the maximum level prescribed for that year. The provision applies to properties that become eligible for new construction treatment during the year in questions, it has no retroactive implications.

Access the City’s New Construction by-law on-line.

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