News and Insights

Tax Alert | 2021 Ontario Property Tax Update

Tax Development Nov 24, 2020

As part of its 2020 budget and overall pandemic management strategy, Ontario recently announced significant relief initiatives for owners and renters of commercial property in the province. These measures, which range from operating cost rebates to property tax rate reductions, have been summarized below.

COVID-19 Cost Relief for Business

Starting November 16, eligible Ontario businesses in “Modified Stage 2” regions categorized as “Control” (i.e., red) or “Lockdown” (i.e., gray) can apply for rebates to help with their fixed costs, such as property tax and energy expenses. This support is available to businesses that are required to close or restrict services as a result of public health measures, including those announced on October 9 and November 20. At the time of writing, this includes businesses in the Toronto, Peel, York, Hamilton, Halton, Durham, and Waterloo regional public health units.

Types of businesses that are eligible for COVID-19 support include:

  • Restaurants and bars;
  • Facilities for indoor sports and other recreational fitness activities;
  • Performing arts centres, museums, and cinemas;
  • Bingo halls, gaming establishments, and casinos;
  • Conference and convention centres;
  • Community and multipurpose facilities;
  • Personal care services (excluding oxygen bars); and
  • Racing venues.

 However, the following will not be eligible for this provincial support:

  • Businesses located outside Modified Stage 2 public health units not categorized as Control (red) or Lockdown (gray); and
  • Businesses located within areas subject to public health measures (i.e., Control or Lockdown restrictions) that are not required to close or significantly restrict services.

Businesses will be able to apply for both the property tax and energy rebates using a single form. Successful applicants may be able to recover up to 100% of their property tax and energy costs. Further information can be found at: Ontario COVID-19 Relief Funding for Business

This provincial support can be combined with federal support provided through the newly introduced Canada Emergency Rent Subsidy (CERS), which is available to qualifying renters and property owners that have experienced a decrease in revenue because of the pandemic. Further details on the CERS can be found on the Canada Revenue Agency website at: CERS Information

Business Education Tax Reduction

Ontario property tax rates are typically comprised of municipal rates and provincial Business Education Tax (BET) rates. Varying BET rates across the province presently contribute to regional tax inequities and affect competitiveness, with many businesses subject to the highest BET rate of 1.25%. For the 2021 taxation year, the province will reduce high BET rates to 0.88% for both commercial and industrial properties, which will benefit over 200,000 business properties in Ontario.

Property Tax Relief for Small Business

In response to concerns about the property tax burden on small businesses, Ontario is putting forward a proposal to provide municipalities the flexibility to target property tax relief toward small business properties through the creation of a new optional property subclass.  The optional subclass will be available beginning in 2021, and the province is considering matching these targeted municipal property tax reductions. As a result, small businesses could benefit from both municipal and provincial property tax relief of up to $385 million by 2022-2023.

More Information

Further information on the property tax changes announced in the Ontario budget can be found at: 2020 Ontario Budget Documents

As tax advocates and partners, Ryan is dedicated to finding solutions to reduce your operational expenses and allow your business to prosper in times of crisis. If you have questions about how any of these changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.