TheDMAWay

Tax Pulse by DMA Canada- Ontario Update

by DMA Staff | Apr 13, 2017
Banner- Issue 2

Vacancy Rebate Repeal

VACANCY UNIT REBATE AND VACANT/EXCESS LAND SUBCLASSES

According to the Ontario Ministry of Finance, since 1998, the Vacant Unit Rebate/Excess Land Subclasses have provided rebates and reductions to property owners who have vacancies in commercial and industrial buildings or land.

Under Section 364, subsection 1: “Vacant Unit Rebate — every local municipality shall have a program to provide tax rebates to owners of property that has vacant portions if that property is in any of the commercial classes or industrial classes, as defined in Section 308, subsection 1, of this Act.”

On the surface, this section seems explicit and straight forward; owners can still file their applications to the municipality so long as they meet the following criteria:

  1. commercial and/or industrial buildings that are entirely vacant and unused for at least 90 consecutive days,
  2. commercial buildings that are partially vacant; the vacant portion of the building must be unused for at least 90 consecutive days and the vacant portion must be clearly delineated or physically separated from the used portions of the building, and
  3. industrial buildings that are partially vacant; the vacant portion of the building must be unused for at least 90 consecutive days, and the portion must be clearly delineated or physically separated from the used portions of the building.

Please also note that those properties that are within the boundaries of the City of Toronto need to be aware of Section 331 of the City of Toronto Act which allows the City of Toronto to enforce the same set of criteria as those enforced by the Municipal Act for vacancy rebates.

Both Acts state that:

  • if the property is commercial, the rebate shall be equal to 30 percent of the prescribed taxes as commercial and;
  • if the property is industrial, the rebate shall be equal to 35 percent of the prescribed taxes as industrial;
  • secondly, both Acts state that the vacancy application to the local municipality has to be made by the last day of February of the year following the taxation year for which the application is made;
  • finally, both Acts state that once the initial verification of your application and supporting documents is complete, a secondary verification may include a request for further documentation or a site inspection, or both.

After jumping through these bureaucratic hoops, you’d think you can finally sit back and wait for your rebate to be processed. Up to the end of the 2016 taxation year, this is how the system still functioned.

Municipalities across the Province of Ontario have made requests to the Ministry of Finance that will allow each municipality to “tailor” the business vacancy rebate and reduction programs in a way that “makes sense” for that municipality.

What will this mean to you when future vacancy applications need to be filed? Simply, the above change, announced by the Ministry of Finance, in November, 2016, could restrict vacancy rebates to as little as two years.

The City of Toronto wants to take this one step further; Mayor John Tory announced his city’s intention to completely do away with any rebates, pending provincial permission. These changes are based on the numerous complaints filed by these municipalities due to their lost revenue, as a result of these vacancies.

This will allow the implementation of regulations, in the Ministry of Finances words, “that will allow changes to the vacant rebate and reduction programs to reflect community need and circumstances, while considering the interests of local businesses.”

 As at this writing, the Province has now agreed to give individual cities a say in how — or if — that rebate is handed out. The implications of this program are evident — municipalities, with the blessing of the Province, are going to force property owners to challenge vacant rebates — a rebate that rightfully belongs to them.

Stay tuned.

Need more information?
DMA Canada’s expert property tax team is ready to help!

Contact Zahir Badsha for more information:

Zahir Badsha
Operations Manager

zbadsha@dmainc.com
800-309-2100 ext. 1527