Property Assessments for Provincial Land Tax

Many tourism businesses have been contacted recently by the Municipal Property Assessment Corporation regarding property assessments in unorganized territories. This has led to a flurry of calls and questions to the NOTO office, so perhaps a brief overview of who does what in the property tax world is in order.

In Ontario, property taxes are generally collected by local municipalities. The amount of these taxes is based on the value of the property. These municipal taxes generally have two components; a municipal property tax and an educational tax. Each component will have its own tax rate.

How is the value of the property determined, for tax purposes? This is where the Municipal Property Assessment Corporation or MPAC comes in. MPAC is the corporation that was created by the provincial government to conduct property assessments on behalf of the municipalities. MPAC does not establish the tax rates – that is done by the municipalities and the province. MPAC simply calculates and reports property values to the municipalities so that they can determine your property taxes.

There a lots of individuals and businesses in northern Ontario who have no municipal government. These areas, where no municipality exists, are referred to as unorganized territories. In many cases they have township names, but no township government. The responsibility for the very limited local services that exist in these areas falls to the provincial government. The provincial government collects a small tax in these areas that is known as the Provincial Land Tax.

Aside from the lack of services delivered, there is another reason that the Provincial Land Tax is very low – the assessment base has not been changed since the 1940’s. That is in the process of changing, however. Several years ago, the provincial government indicated that they intended to update and reform the Provincial Land Tax, including basing this tax on fair market value, as is the case for municipal taxes.

NOTO participated in these consultations, and offered a number of recommendations to the government. Aside from the obvious need for taxes to be reasonable, in terms of the very low level of services received, we also stressed the importance of having a system that is easy to understand and easy to administer, given the relatively low values of the properties involved. This is especially true in light of the remote locations that would make onsite assessments prohibitively expensive relative to the taxes these properties generate. We strongly urged consideration of some sort of formula based system using basic parameters like lot size and building size.

We have heard very little about the process over the past several years, other than occasional mentions that the review is still ongoing. There are no specifics available on what the new Provincial Land Tax will look like, or when it will come into effect.

However, MPAC have recently sent self reporting forms to many tourism businesses in unorganized territories, and they have indicated that they intend to conduct on-site assessments, as well.

The Ontario Ministry of Finance passed legislation requiring that assessments be updated.

Does this mean that the provincial government is ready to implement Provincial Land Tax reform, and they need new assessment numbers to carry this out? Maybe, but not necessarily. A similar assessment exercise was carried out ten years ago and nothing came of it. However, given the stated intent of the government to implement PLT reform and the recent consultations, it is likely that some sort of change is in the works this time.

How does this impact land that you “rent” from the province, such as outposts on LUP’s or Crown Leases? These properties are still subject to property tax, and this makes sense when they are located within municipalities. We have suggested, however, that land in unorganized territories that is rented or leased from MNR could be subject to a simpler system. MNR is moving to a market based system for LUPs and leases, and NOTO is actively working with them to develop a simple and transparent system for establishing land values.

We have urged MPAC to work with MNR to attempt to develop a common reporting and valuation system in order to avoid duplication and confusion. MPAC have begun discussions with MNR and we will keep you posted as things progress.

It is still too early to say what form Provincial Land Tax reform will ultimately take, but NOTO will continue to actively work on behalf of our industry to create a system that is open, fair, and appropriate to our needs.

This article was taken from pages 12 & 13 of NOTO's "The Outfitter" publication, Spring 2009 Issue


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