Postponed reassessment delays Ontario's next property tax cycle

Ontario to delay next property tax cycle

Real estate groups welcome decision to postpone this year’s reassessment
Tuesday, March 31, 2020
By Barbara Carss

Ontario property owners will have one less shifting tableau to contemplate with the postponement of this year’s planned reassessment, which also delays a new four-year property tax cycle that had been slated to begin in 2021. The move was announced in last week’s provincial economic and fiscal update among several measures in response to the COVID-19 outbreak, but additionally opens a window to adjust the mechanics of the assessment process itself.

“This postponement will also provide an opportunity to better reflect the advice received through the Property Assessment and Taxation Review that is currently underway,” the economic update states. “Through this review, the government is seeking stakeholder input to explore opportunities to support a competitive business environment and enhance the accuracy and stability of property assessments. The feedback received during this review will help to inform the development of policies for the next reassessment.”

In the interim, the valuations used to calculate ratepayers’ portion of the property tax burden during the 2017-2020 tax cycle will remain in place for next year. Those are based on property values as of January 1, 2016. The next cycle, originally scheduled for 2021-2024, was to have introduced new valuations based on property values as of January 1, 2019.

“That’s written in the legislation as it is now worded,” notes David Gibson, a property tax consultant and director with Yeoman & Company Paralegal and Professional Corporation. “However, the Province may decide to use an alternative baseline — maybe even something like July 1, 2020 rather than January 1, 2019 or January 1, 2020.”

That would mean setting aside an exercise that is already largely completed. “MPAC (Municipal Property Assessment Corporation) would have issued new assessments for more than five million properties beginning this spring,” Ontario’s economic statement reported. However, real estate industry advocates welcome the move.

“We think, generally, that the postponement of the new assessment cycle is a good plan,” says Brooks Barnett, director of government relations and policy with REALPAC. “Application of new values conventionally brings a number of changes for different asset types and, given the challenges that have now arisen, it would just be an added stress at a time we don’t need it.”

“We applaud the move in that it brings stability,” concurs Tony Irwin, president and chief executive officer of the Federation of Rental-housing Providers of Ontario (FRPO). “I think we all agree, in times of crisis, stability is quite important.”

Further questions for in-progress assessment and tax review

REALPAC, which represents many of Canada’s most prominent commercial real estate portfolios, has been one of the stakeholders participating in Ontario’s in-progress assessment and property tax review and is well versed in the fallout from valuations calculated on the “highest and best use” of the property. Where previously a couple of dozen properties would typically experience a dramatic spike in assessed value related to what could theoretically be built on them, Toronto’s condo-building boom has more recently pushed that tally into the range of 1,500.

“We started a couple of years back seeing really big swings in assessment in the commercial market in Toronto and the numbers have ballooned,” Barnett observes. “We are very supportive of the government’s voluntary review of the assessment regime.”

For now, most commercial and multifamily landlords have more pressing priorities than pondering a new baseline date for reassessment. “We are waiting to see what happens April 1, and watching to see all the different government programs roll out and how effective they are,” Irwin says.

Both he and Barnett agree it’s too early to have a sense of what a preferred baseline date might be. In future, though, Barnett suggests the scope of Ontario’s assessment and property tax review may need to widen further and possibly include the federal government.

“What we need to focus on is a stimulus for the economy and the industry,” he reasons. “Property tax is one of the biggest government fees the commercial sector pays. If we are trying to keep the sector humming, and there are ways to leverage the property tax, this is a conversation worth having.”

Housekeeping details for appeals and requests for reconsideration

For property owners who were in the midst of filing a request for reconsideration (RfR) with the MPAC or an appeal to the Assessment Review Board (ARB) before COVID-19 interrupted business as usual, there are some new administrative details. The March 31 deadline for submitting a RfR has now been extended until 15 days after Ontario’s state of emergency has been lifted, although Gibson advises applicants they can proceed as if the original deadline is still in effect.

“Everything is online and MPAC is working from home,” he says. A recent ARB memorandum similarly instructs prospective filers to meet the original deadline, while also acknowledging potential for an extension.

“All appeals are required to be filed by the March 31, 2020 deadline. As the majority of appeals are filed electronically, the Board expects that this will have a minimal impact for the overall system, however, in the event that you are unable to meet that deadline, you will be permitted to file your appeal within 15 calendars after the (provincial) Order has been lifted,” it states.

Teleconference and written submission ARB hearings will proceed on schedule during the current work-from-home period. New hearings will be scheduled for a date after May 19, 2020. Outstanding tax appeals from 2019 that have not been decided by March 31 will be automatically pushed to 2020 with no requirement for appellants to formally resubmit the appeal or pay additional fees.

Barbara Carss is editor-in-chief of Canadian Property Management.

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