The Managed Forest Tax Incentive Program (MFTIP) was introduced to encourage the stewardship of forests by offering a substantial reduction in property taxes to eligible property owners. There are two benefits for property owners who meet the eligibility requirements set out by the Ministry of Natural Resources and Forestry (MNRF):
- Property tax rates for managed forest properties are 75 per cent lower than residential tax rates; and
- The assessed values of managed forest properties are similar to the values of woodlots on farms in the area. This assessment approach ensures that the valuation takes into account the value of the property as a woodlot only, and does not consider future potential uses.
The Managed Forest Tax Incentive Program is a voluntary program administered by the Ministry of Natural Resources and Forestry (MNRF). To be eligible, property owners must be Canadian citizens, make a commitment to forest stewardship, own at least 4 hectares of forested property and must agree to prepare and follow a Managed Forest Plan for their forest.
How Are Managed Forests Properties Assessed?
Managed Forest properties are assessed based on regulated rates per acre that are determined through an assessment approach that is similar to farms. These regulated rates are prescribed by the Minister of Finance and are developed from an analysis of the assessed values of woodlots on farms in a municipality within the same economic area. Economic areas represent areas where farms with similar soil characteristics sell for similar prices. This assessment approach, known as the farmland proxy, was developed in consultation with the managed forest stakeholders including:
- Ontario Forestry Association;
- Ontario Woodlot Association;
- Conservation Ontario; and
- Association of Ontario Municipalities.
If the farmland proxy results in a value that is higher than the value of the property based on its value as a managed forest (i.e., its current use value), the managed forest property’s assessment is capped at the current use value. This ensures that no managed forest property owner is disadvantaged under the farmland proxy assessment approach.
The farmland proxy is also modified where the proxy value results in an assessment that is significantly lower than the current use value of the property. In these circumstances, a minimum or floor is applied to ensure that the assessment is no more than 69 per cent below the current use value.
Many managed forests are part of larger properties that are also used for residential, recreational, farm or commercial purposes. In these situations, only the managed forest portion of the property is eligible for the lower taxation rate and the farmland proxy assessment approach. The Minister of Finance has prescribed the way in which Municipal Property Assessment Corporation (MPAC) is to apportion the value of mixed-use properties. The regulation ensures that, as a result of applying the farmland proxy, there is no shift in the value of the overall property to the other portion (i.e. residential, commercial, farm) of the property.
Need More Information?
MPAC will be pleased to answer any questions related to the assessments of managed forests. You can contact MPAC toll-free at 1 866 296-6722.
If you have any questions about eligibility for the Managed Forest Tax Incentive Program,contact:
Managed Forest Tax Incentive Program
Ministry of Natural Resources and Forestry
5th Floor S
300 Water St
PO Box 7000
Peterborough ON K9J 8M5
For more information, contact: MFTIP@ontario.ca
Tel: 1-855-86-MFTIP (1-855-866-3847)