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Background
Farm Activities
Assessment of Horse Riding and Equestrian Properties
Commercial Activities
Apportionments
Impact to Property Owners
Related Information
Background
On February 3, 2005, the Ontario Government requested the Municipal Property
Assessment Corporation (MPAC) to review the criteria for the property tax
classification of equestrian facilities.
Following consultations with equine associations, the Ministry of Finance,
the Ministry of Agriculture and Food, the Ontario Federation of Agriculture
and the Christian Farmer’s Association, MPAC submitted for the Government’s
review and approval, recommendations for the appropriate assessment and classification
treatment of equestrian facilities.
On March 14, the Ministry of Finance passed O.Reg. 100/05 that amends the
property classification regulation (O.Reg 282/98) to change the way equestrian
operations are assessed and classified. The regulation comes into effect
for the 2004 and subsequent taxation years.
The regulation provides the following direction with respect to the valuation
treatment and tax classification of the various activities that occur on
equestrian facilities:
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Farm Activities
The new regulation prescribes that land and buildings used for certain activities
are to be assessed as farmland under section 19(5) of the Assessment Act at their current use value. These uses include: breeding, raising,
boarding, maintaining, training or selling horses. Many of these activities
have qualified for farm valuation treatment in the past, with the exception
of the boarding of horses.
Under this regulation, the boarding of horses, regardless of who owns the
horses, now qualifies for the farm valuation treatment. The classification
of the property will depend on whether the owner qualifies for the farm tax
rate. If the owner qualifies, the property will be classified as farm. If
the owner does not qualify, the property will be classified as residential.
It is important to note, however, that these activities are not considered
to be farm activities when they are conducted for recreational or hobby purposes.
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Assessment of Horse Riding and Equestrian Properties
Residential Activities
The regulation also specifies that land used to provide
horse trail rides or horse riding lessons to the public are to be classified
as residential. These activities are rural recreational in nature, and are
now to be treated similar to other land intensive, rural recreational activities,
such as golf courses and ski hills.
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Commercial Activities
While the regulation does not specifically
address other activities that occur on equestrian facilities, many activities
will continue to be classified as commercial since they default to the commercial
class under existing provisions in the commercial property classification
regulation, as “land and
vacant land that is not included in any other property class.” These
activities include: tack shops or premises used to sell equestrian supplies
or clothing; restaurants; snack bars; cafeterias; commercial race tracks
and slots; grandstands; banquet halls; and areas used to provide black smith,
farrier or other retail services to the public. Since these activities are
commercial in nature and operate in direct competition with off-farm businesses,
they will continue to be treated as commercial property for valuation and
classification purposes.
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Apportionments
There are many equestrian facilities in the province that have a combination
of the commercial, farm and residential uses described above. In these dual,
or multiple-use facilities, the assessment will be apportioned to the appropriate
class based on the value attributable to the portion of the property used
for each purpose. Provided there are other farming activities occurring on
the property, the land and buildings will be valued similar to other farms.
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Impact to Property Owners
The regulation changes may affect equestrian facilities in two ways. The
assessed value of a property may change and the classification, which affects
what tax rate will apply, could change. How an individual assessment will
change will depend on how it is currently assessed.
MPAC will be reviewing the assessed value of equestrian facilities that
were recently changed to commercial and make the necessary changes.
Property owners who would like more information on how to process an assessment
change may call MPAC’s toll free Customer Service line at 1 866 296-MPAC
(6722) or on the web site, choose “About MPAC” from the top menu,
click on “Fact Sheets” from the side menu, and see Backgrounders
and Questions & Answers.
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Related Information
Note: This procedure has been developed to provide the public with a general understanding of the assessment procedures for equestrian properties in Ontario. The applicable law prevails to the extent there is any conflict between the procedure and the relevant law. |
