Tax Alert | Ontario Property Tax Update

How Another Ontario Property Tax Valuation Delay Affects Your Business

If you are a property owner or tenant of real property in Ontario, the Ontario government has announced changes that you should be aware of.

Base Date Remains Frozen on January 1, 2016

On August 16, 2023, the Ontario Minister of Finance announced that the anticipated property tax reassessment had once again been deferred. Property assessments for 2024 will be based upon market values as of January 1, 2016, making this the seventh consecutive year that Ontario property taxes will not be updated to reflect current market conditions.

This further delay is contrary to recent requests for a reassessment for the 2024 taxation year made by the City of Toronto Mayor, Canadian Property Tax Association, Ontario Restaurant Hotel & Motel Association, REALPAC, NAIOP Greater Toronto, Canadian Manufacturers & Exporters, Canadian Federation of Independent Business, and others. The request also indicated that the 2024 general reassessment should be followed by regular periodic reassessments to ensure properties are being taxed at their current market value.

This extended reassessment deferral will add to inequities in tax payment distributions, increased liabilities for many Ontario businesses, and further imbalances to Ontario’s assessment system. As a property owner or tenant, paying property taxes without the certainty on its fairness can become a huge burden to bear.

Review Brings Further Uncertainty

In a letter addressed to those who had requested the reassessment, the Minister of Finance stated, “As a first step, our government will conduct a review of the property assessment and taxation system that will focus on fairness, affordability and business competitiveness. . . we will continue to defer property reassessments until our work is done.”

At this time, the government has not indicated if 2024 will be the last year of this assessment cycle or if the assessment cycle will continue to be extended.

The Importance of Current Value

Kenneth West of Ryan Law recently wrote¹:

“The way the assessment system works in Ontario, if property values are out of sync with the markets, then one property or group of properties can pay more than their fair share. As long as every property is assessed appropriately, taxes are shared in accordance with value. If, for example, hotel properties in a municipality have grown in value by 5% while warehouses and distribution centers have grown at a rate of 25%, then hotel properties in that municipality are going to have an unfair tax burden. If everyone’s value rose at the same rate, taxes would only increase if the municipality passed a budget increase with corresponding tax hikes. The legislative scheme requires a regular update which is why the current system, which was first implemented in 1998, required a regular general reassessment.

Stability is found in current values rather than frozen values. With Ontario’s growth and economic development, the priority should be to ensure that taxes are distributed fairly and in accordance with the legislative scheme. This is especially so when the Assessment Review Board has recently held that, effectively, the legislative scheme does not allow for more than one challenge to an assessment for the valuation date.” 

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¹ Ontario Assessment Update: Without Ministerial Action, Next Year is A General Reassessment | Ryan Law (ryanlawyers.com)

Can I Still Appeal?

The answer is yes if you have not previously filed an appeal during the current assessment cycle, which started with the 2017 taxation year, or if you filed an appeal that was later withdrawn.

The answer is less clear if prior appeals have been settled. Several things need to be reviewed that may justify, or allow for, an appeal.

In Ontario, there is ongoing litigation on whether the annual assessment roll ensures a taxpayer’s right of an annual appeal. This is not the first time that Ontario governments have shied away from current market value assessments. Historic frozen roll caselaw provides critical guidance on how market shifts that created inequitable assessments were tackled in the past.

The property tax professionals at Ryan can assist you in making the correct decisions during this ongoing period of property tax uncertainty.

What Can You Do in the Eighth Year of the Assessment Cycle?

While the 2017 tax year was tied to the base date of the assessment cycle, we are going into seven additional years of a cycle with no reassessment. Whether you have ongoing appeals, appeals that are settled, or if you have not appealed previously, there is a chance you could benefit from looking at your assessment in this extended cycle.

Our integrated property tax team, including designated appraisers, former local assessment officials, engineers, attorneys, paralegals, and financial analysts, can maximize potential property tax refunds while ensuring compliance with the regulatory requirements in all Canadian jurisdictions.    

For more information, a second opinion on your assessment, or to discuss your current situation, please contact your Ryan account representative or reach out using the form below.