Guide to Property Assessment in Ontario: Part IV
Part IV - Property Taxation
Property assessments are used to determine the share of the total property taxes that each owner will pay to the municipality/local taxing authority each year. This section examines taxation and its relationship to property assessment.
The main topics are:
- Municipal property taxes
- Education property taxes
- Property tax adjustments
- Property tax incentive programs
- Provincial Land Tax
Municipal Property Taxes
While MPAC is responsible for determining the property classifications and current value assessments for all properties in Ontario, municipalities are responsible for setting the tax rates, calculating the taxes payable and collecting the taxes.
Each year, local governments (e.g., municipalities/local taxing authorities, counties, regions) determine the amount of money they need to provide services, such as public transit, police services, parks and libraries.
The financing for these services comes primarily from property taxes paid by residents and businesses in the local area. Additional funding may come from “user fees” or “non-tax revenue” such as parking fines and from any funding provided by the Provincial Government.
Property taxes are not a fee for service, but rather a way of distributing the cost for local services and programs throughout the municipality.
To calculate the amount of property tax each property owner is required to pay, municipalities use the current value assessments determined by MPAC. In the fall, MPAC provides this information to local municipalities/local taxing authorities on annual assessment rolls.
Using the assessment roll, municipal staff determine the total assessment base for each property class (e.g., residential, multi-residential, commercial, industrial). Once the total financial requirement is determined, a tax rate is set for each class.
There may be three tax rates indicated on a property tax bill:
- the municipal tax rate set by the local municipality/local taxing authority;
- the county or regional tax rate set by the county or regional government; and
- the education tax rate set by the Provincial Government (education property taxes are discussed later in this chapter).
Calculating Individual Property Taxes
For most properties (e.g., residential, farms), the property taxes can be calculated by multiplying the phased-in assessment indicated on the Property Assessment Notice by the tax rate.
|municipal tax rate x phased-in assessment for the particular taxation year||=||municipal portion of tax|
|county/regional tax rate x phased-in assessment for the particular taxation year||=||county/regional portion of tax|
|education tax rate x phased-in assessment for the particular taxation year||=||education portion of tax|
|total property tax|
In some cases (e.g., commercial, industrial, multi-residential properties), the Province or municipality may implement measures that affect the actual taxes paid on a property. For more information, please refer to your property tax bill or contact your local municipality.
Education Property Taxes
In Ontario, public education is funded through both property taxes and government grants.
School board funding allocations are determined by the Ministry of Education using a student-focused funding formula. The Ministry of Finance determines the education tax rates based on the funding allocations.
Municipalities/local taxing authorities apply the education tax rate to the phased-in assessment for the particular taxation year of each property to determine the amount of education taxes payable. This means individuals who own more than one property (e.g., a primary residence and a cottage property) are required to pay education tax on each property.
Education tax dollars are collected as part of the property taxes. These tax dollars are combined with provincial funding and distributed to each school board up to the level set by the funding formula.
Depending on where the property is located, one or all of the following school boards may have jurisdiction:
English-language Public District Board
English-language Separate District Board
French-language Public District Board
French-language Separate District Board
Protestant Separate School Board (Penetanguishene only)
MPAC collects school support data from property owners and tenants to help the Province determine the number of elected trustee positions for each school board. Designating school support enables qualifying property owners to vote for school trustees.
To request a change in school support, property owners and tenants must complete a school support application. Application forms are available from local school boards. Applications may be filed at any time during the year and the change will become effective the following taxation year.
Property Tax Adjustments
Municipalities may adjust property taxes under certain circumstances or where there may be changes on properties during the tax year. For instance, if a building is destroyed by fire or demolished, the property owner may apply for a tax adjustment based on the value of the building and the number of months left in the tax year. For more information about property tax adjustments, please contact the tax department at your local municipal/local taxing authority office
Property Tax Incentive Programs
The Ontario Government has implemented a number of initiatives that offer property tax relief to qualifying individuals, including the Farm Property Class Tax Rate Program, Managed Forest Tax Incentive Program, Conservation Land Tax Incentive Program, Seniors and Disabled Exemption Program, Vacancy Rebate Program and others.
Many of these programs are administered by the municipalities/local taxing authorities, while others are administered by the Province. For more information about property tax incentives, please contact the tax department at your local municipal/local taxing authority office or the Province of Ontario.
Provincial Land Tax
Provincial Land Tax is a tax administered by the Ontario Ministry of Finance. The taxes collected through this program fund services for Northern Ontario properties that fall outside of current municipal boundaries. Properties in this category may be subject to any or all of the following taxes:
- Education Tax
- Provincial Land Tax
- Local Roads Board Tax
- Local Services Board Tax
Beginning with the 2009 tax year, properties outside municipal boundaries are also valued at their current value assessment. For those properties that are within the jurisdiction of a school board, the education portions of the assessments will be phased-in just as they are in the rest of the Province.
For questions about the provincial land tax and education tax, please contact the Ontario Ministry of Finance. Questions regarding your local roads board tax or local services board tax should be directed to the appropriate board.
We hope this guide provided you with a general understanding of the property assessment process in Ontario. For more information, please contact MPAC.
MPAC gratefully acknowledges the following for their assistance in producing this guide.
- Alberta Municipal Affairs
- Assessment Review Board
- Association of Municipal Clerks and Treasurers of Ontario
- Ontario Ministry of Finance
- Municipalities of Ontario
- MPAC employees