PROPERTY TAX & ASSESSMENT LAW
Through 1997, 1998 and 1999 the government of Ontario has made many reforms to the property tax system. This section deals mainly with the law as it applies at January 2007 and for the future.
There are many deadlines for taking action, filing information or giving notices regarding property tax issues. Some of the more important ones are set out below.
Deadline for the following Municipal Act applications:
Section 357 (formerly 442): Application for cancellation, reduction or refund of taxes for reasons such as a property "change event," or a property becoming exempt, or razed by file or demolition, or undergoing repairs or renovations of over 3 months
Section 364 (formerly 442.5): Application for rebates for vacant commercial or industrial property. Note eligibility requirements and other details set out in O.Reg. 325/01
Section 361 (formerly 442.1): Application for a tax rebate for eligible charities
Section 334 (formerly 447.73): Gross or manifest error in tax bills if want ability to appeal
Appeal from the assessment for that year's taxes
September 30 or 30 days after final tax notice (the later of)
Provide notice to commercial or industrial tenants with gross leases to charge them the equivalent of the former business occupancy tax
November 1 of the fifth year following the year in respect of which the application is made Section 334 (formerly 447.73): Application for the cancellation, reduction or refund of taxes due to an overcharging by reason of a gross or manifest error in the calculation of taxes. Under the previous rules, the deadline was February 28 of the following year. The new application deadline is in effect only until January 1, 2005. After that, the February 28 deadline may apply.
Billing commercial and industrial tenants for tax recoveries has become a very complicated operation. Issues many owners deal with include:
different tax rates for different assessment portions (for example, office tower, shopping centre and residual commercial)
determining the building's taxes if fully occupied,
setting a standard tax rate in the building or separate standard tax rates for different uses in a mixed use building (for example, ground floor retail versus office, which is not the same as the difference between office tower and commercial)
the allocation provisions in all the leases,
tenants' tax caps,
changes faced by tenants because of the elimination of separate business occupancy tax rates.
BUDGETING AND PLANNING
For the 1998, 1999 and 2000 property taxes, new assessments were put in place based on 1996 market values. However for most owners, the final 1998, 1999 and 2000 taxes did not fully reflect the new assessments because increases were capped, and decreases were clawed back to make up the revenue lost by the caps.
For the 2001 and 2002 property taxes, new assessments were issued based on 1999 market values. For the 2003 property taxes, new assessments were issued based on 2001 market values. From 2004 to the end of 2005, the assessments were based on market values at June 30 of the previous year. The new valuation date used to determine property values for '06, '07, and '08 taxes, is January 1, 2005. However, the taxes on many properties are still capped or clawed back. Therefore, taxes will change from year to year even if assessments stay constant.
The taxation system includes different tax rates on different classes of properties. For this and other reasons there are significant new issues for property tax planning which can reduce taxes. Many of the planning issues have long lead times, and are best implemented early in new developments or early in re-developments. the sooner you get advice the better off you will be.
We would be happy to advise you about your assessments, filing appeals, negotiating with assessors, allocating taxes between tenants, or any other property tax related matters.