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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 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(Current Value Assessment) 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 had 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 extended 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 had already been paying CVA tax could experience a large enough change in assessment to throw them back into the capping and clawback program.

In the Fall of 2015, the Province initiated a review of the capping program and in April 2016 announced that they would be providing municipalities with additional flexibility to adjust their capping parameters to increase progress towards CVA level taxes including a capping exit strategy.  As a result of these updated parameters, properties in the Industrial tax class will no longer be protected or clawed back effective 2016.  Properties in the Commercial and Multi-Residential tax classes will move towards CVA tax over a 4 year phase-out period.  Effective 2019, all tax classes will be billed at CVA tax.

The following are the updated capping parameters adopted by Peterborough City Council on June 6, 2016.

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

The City has adopted the following:

  • that capping be based on a maximum increase of 10% of the previous year's CVA tax for the eligible property;
  • that no capping credit be applied for properties where the required billing adjustment is within $500 of the properties' CVA tax, affected properties would be billed at their CVA level;
  • that properties within the industrial tax class no longer be eligible for the capping program;
  • that properties within the Commercial & Multi-Residential tax classes move towards CVA tax over a four year phase-out period;
  • that properties who achieve CVA tax in 2015 and/or properties that cross over between classes from 2015 to 2016 be left at CVA tax for the 2016 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.