Assessment Procedure for Processing Municipal Tax Applications

Goal

To provide a general understanding of MPAC's role in processing municipal tax applications for property tax adjustments.

Background

MPAC's role in processing municipal tax applications is to provide the municipality with the information it needs to enable municipal council to determine whether a tax refund, cancellation, reduction or increase is warranted.

As outlined in the Municipal Act, 2001, the jurisdiction to make decisions on applications for tax refunds or tax increases rests solely with municipal council.

Sections 357 and 358 of the Municipal Act, 2001 provide municipalities with the authority to cancel, reduce or refund taxes based on specific criteria.

Section 359 of the Municipal Act, 2001 provides municipalities with the authority to increase taxes if there was an undercharge as the result of a gross or manifest error that is clerical or factual in nature.

Similar requirements are contained in sections 323, 325 and 326 in the City of Toronto Act, 2006 for properties in the City of Toronto.

Only the property owner, the spouse of the owner, tenant, occupant or other person(s) in possession of the land may file an application for a property tax adjustment with the treasurer of the municipality.

Overview of Sections 357, 358 and 359

Section 357

Section 357 states:

  • "Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if ."
  • a "change event" as noted in subsection 34 (2.2) of the Assessment Act causes the property or a portion of the property to be reclassified in a different class of real property that has a lower tax ratio for the taxation year than the class the property or portion of the property is in before the change event;
  • land has become vacant or excess land during the year or during the preceding year after the return of the assessment roll for the preceding year;
  • land has become exempt from taxation during the year or during the preceding year after the return of the assessment roll for the preceding year;
  • a building was demolished or razed by fire during the year or during the preceding year after the return of the assessment roll;
  • a building was damaged to render it substantially unusable during the year or during the preceding year after the return of the assessment roll;
  • a mobile unit was removed during the year or during the preceding year after the return of the assessment roll for the preceding year;
  • a property owner was overcharged due to a gross or manifest error that was clerical or factual in nature but not an error in judgment;
  • repairs or renovations that prevented the normal use of the land for a period of at least three (3) months during the year.

The application must be filed before February 28 of the year following the property tax year for which the application is made.

For example, if a garage was demolished in September 2009, the application to adjust taxes must be filed before February 28, 2010.

Section 358

Section 358 states:

"Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality may cancel, reduce or refund all or part of the taxes levied on land in one or both of the two years preceding the year in which the application is made for any overcharge caused by a gross or manifest error in the preparation of the assessment roll that is clerical or factual in nature, including the transposition of figures, a typographical error or similar errors, but not an error in judgment in assessing the property."

The application must be filed with the treasurer between March 1 and December 31 and the application may apply only to taxes levied for one or both of the two years preceding the year in which the application is made.

Section 358(5) restricts tax applications in certain circumstances.

Section 359

Section 359 states:

"Upon application made by the treasurer of the local municipality, a local municipality may increase the taxes levied on land in the year in respect of which the application is made to the extent of any undercharge caused by a gross or manifest error that is a clerical or factual error, including the transposition of figures, a typographical error or similar error, but not an error in judgment in assessing land."

Section 359 (2) prohibits applications for increases after a tax certificate has been issued.

An application under this section must be made on or before December 31 of the year following the year for which the application is made.

Process

  • A property owner files an application under section 357 or section 358 with their municipality or the municipal treasurer files an application under section 359.
  • The municipality forwards the application to MPAC for its review of the factual information. If required, MPAC will conduct an inspection of the property.
  • The results of the review are recorded and MPAC's response and the municipal tax application are then returned to the municipality for council's decision regarding any tax adjustments. MPAC will also be available to provide information as witnesses to hearings or appeals of tax adjustment applications before the municipal council or the Assessment Review Board.

The following are examples of MPAC's role in dealing with applications for tax adjustment:

Example 1

A residential structure is damaged by fire in the current tax year. The property owner files an application before February 28 of the following year under Section 357(1)(d)(ii). The basis of the owner's application is that the building is unusable.

During its review of the information, MPAC will provide the following to the municipality:

  • date of the last inspection;
  • information and dates that the owner provided about the fire;
  • pertinent information noted during the inspection, such as comments about the extent of the damage;
  • the notional value attributed to the residential structure; and
  • information respecting the revised value of the property.

Example 2

A commercial property is purchased by a religious organization in the current tax year. The owner files an application for a refund of taxes prior to February 28 of the following year under section 357(1)(c) claiming the building is being used as a place of worship and should have been exempt from taxation.

MPAC's role is to determine whether the property warrants a property tax exemption under section 3(1).3 of the Assessment Act.

MPAC will provide the following information to the municipality:

  • date of the last inspection;
  • confirmation that the property is being used as a place of worship; and
  • date the property began being used as a place of worship.

Example 3

A property owner files an application prior to February 28 of the following year under section 357(1)(f) alleging that a gross or manifest error occurred because MPAC had inadvertently added an extra zero to the assessed value of a property. The property was assessed at $440,000 and should have been assessed at $44,000.

MPAC will provide the following information to the municipality:

  • confirmation that an error has been made;
  • full particulars describing the error; and
  • indicate whether, in MPAC's opinion, the error was caused by a gross or manifest error that is clerical or factual in nature, including the transposition of figures or a typographical error, but not an error in judgment in assessing the property.

Example 4

A property is purchased two (2) years prior to the return of the assessment roll and begins to be used as a place of religious worship. It had, however, been classified as commercial taxable for the previous two (2) tax years.

The owner files an application for an adjustment in taxes under section 358(1) due to an overcharge caused by a gross or manifest error in the preparation of the assessment roll.

It is apparent that there has been an error in the tax liability for the past two (2) years. Had MPAC been aware of the circumstances of the property, the tax liability status would have been considered exempt from taxation.

MPAC will provide the following information to the municipality:

  • confirmation that an error has been made;
  • the full particulars describing the error; and
  • indication whether, in MPAC's opinion, the error was caused by a gross or manifest error in the preparation of the assessment roll that is clerical or factual in nature, including the transposition of figures or a typographical error but not an error in judgment in assessing the property.

Example 5

Following the return of the assessment roll, the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) advises the municipality, MPAC and the property owner that the Ministry had received incorrect information about the property class for a farm property. OMAFRA determines the property class should be changed from farmland defined in the farm property class to farmland defined in the residential property class. The municipal treasurer makes an application under section 359(1) to increase the taxes to the extent necessary to correct a gross or manifest error.

MPAC will provide the following information to the municipality:

  • confirmation that an error was made;
  • full particulars describing the error; and
  • indication whether, in MPAC's opinion, the error was caused by a gross or manifest error that is a clerical or factual error, including the transposition of figures, a typographical error or similar error but not an error in judgment in assessing the property.

Important Note: Only municipal council has the statutory power to determine if the error was "gross or manifest" and whether the applicant qualifies for a tax adjustment.

Related Information

Assessment Act
City of Toronto Act, 2006
Municipal Act, 2001

Note: This procedure has been developed to provide the public with a general understanding of MPAC's role in processing municipal tax applications. The applicable law prevails if there is any conflict between the procedure and the relevant law.

Note: The applicable law prevails to the extent there is any conflict between this information and the current law. This information is not intended to provide legal advice and should not be relied upon as such.