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On March 28, 2014, The City of Toronto’s Economic Development Committee Report has adopted recommendations that endeavour to change the . As Ontario’s biggest city, Toronto’s input weighs heavily in terms of influencing changes to this provincial program. Other municipalities have tried similar action plans and recommendations, namely and , without success.

The City’s highlights their request for the Province of Ontario amend the legislation to allow municipalities to establish its own rebate and incentive system to induce owners to stimulate economic growth and job creation objectives. There are four specific elements to the existing Vacancy programs that they wish to amend:

  1. It is currently mandatory for all municipalities to enact the vacancy rebate program, as set provincially. The City wishes to provide the options to each municipality to opt in or out of the vacancy rebate program.
  2. The rates set for Commercial (retail and office, included) and Industrial properties are fixed. The City wishes to provide the municipality autonomy on setting the rates within their own municipality based on local priorities.
  3. The general criterion that a property must be vacant for 90 consecutive days is mandatory across the province. The City wishes to allow municipalities to modify this criterion in order to incent owners to utilize their vacant space(s) for short-term use (<90 days).
  4. Currently, vacant rebates have no time limit, so that owners can receive rebates on continuously vacant properties until it is leased. The City wishes to allow municipalities to set a limit to the length of time a property can incur rebates.

 

Background:

When the Business Occupancy Tax was eliminated in 1998 and consolidated into Property Taxes, the owners were awarded the opportunity to re-coup rebates for vacant periods through the Vacancy Rebate program, being that previously Business Occupancy taxes were paid by tenants, exclusive of vacant space. With Business Occupants taxes eliminated, owners were left to pay for the taxes on the assessment, even during periods when the space was unoccupied.

What AEC is Doing:

AEC has a dedicated team that develops, manages and tracks vacancy applications. This team includes former municipality tax administrators, assessors and tax consultants. Due to the team’s in-depth experience in handling vacancy rebates directly with the various Ontario municipalities, it is flexible and able to adapt to any changes that are finalized through this City of Toronto recommendation.

If the recommendations are finalized, AEC’s action plan would include ongoing information and data collection and a communications strategy:

  • Ongoing electronic tracking and follow-up of all vacancy rebates by municipality across Ontario.
  • Application of “by-municipality” changes to ensure our clients receive maximum rebates allowable in the new vacancy rebate legislative landscape.
  • Encourage activation and engagement of other ratepayers into the coalition but at minimum encouragement communications strategies to support proposed changes
  • Reporting and follow-up of development on both the legislation changes and specific vacancy follow-ups to our clients

Timing:

Although the process has already begun, we expect municipal associations (OMTRA: Ontario Municipal Tax and Revenue Association) and business associations to submit significant recommendations and requests based on the proposed. As indicated by the City of Toronto, they will discuss options with commercial and industrial owners and tenants, Business Improvement Area representatives, accelerator hubs and other stakeholder, with the target period of the first quarter of 2015 to report back to the Economic Development Committee.

What You Can Do:

On this basis and as a result of an active municipal lobbying effort, we recommend immediate participation in the process. If you own commercial or industrial property in Ontario and have concerns that these changes will result in you absorbing the taxes for your property during the time, in which they are vacant, you can reach out to your industry association or we can provide our guidance on the matter. To ensure your concerns are represented, please contact Tracy Parsons directly via tparsons [at] aecpropertytax.com (subject: Email%20thru%20AEC%20website%20-%20Vacancy%20Rebate%20Possible%20Changes) (email) or at 416-642-3003.

We are available to discuss any concerns or questions you may have and can provide additional information upon your request.

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