Introduction

Part I - Overview of Ontario's Property Assessment System

History of Assessment and Taxation in Ontario
The Ontario Model of Property Assessment
Provincial Government
MPAC
Municipalities
Assessment Review Board (ARB)

Part II - Preparing Property Assessments

How Current Value Assessments are Determined
Data Collection
Valuation Date
Current Value
Current Value vs. Sale Price
Property Classification
Approaches to Value
Sales Comparison Approach
Cost Approach
Income Approach
Regulated Rates
Farmland Valuation

Part III - Beyond Assessed Value

Property Assessment Notices
Annual Assessment Rolls
Omitted or supplementary property assessments
Property Owners' Rights to Assessment Information
Resolving Assessment Concerns

Contact MPAC
Request for Reconsideration Process
Assessment Review Board Appeal

Appeal Process
Hearing Process
Review of ARB Decision
Leave to Appeal

Part IV - Property Taxation

Municipal Property Taxes
Education Property Taxes
Property Tax Adjustments
Property Tax Incentive Programs
Provincial Land Tax

Conclusion

Introduction

This Guide provides general information about Ontario’s property assessment and taxation system. While it covers some information about commercial, industrial and special purpose properties, the guide focuses primarily on residential and farm properties. It benefits anyone who wants a basic understanding of property assessment and its relationship to taxation.

It is important to remember the contents of this guide are an interpretation of provincial legislation and regulations. In all cases, the legislation and regulations will prevail. The guide is not intended to provide legal advice.

If you would like more detailed information about property assessment, please contact MPAC.

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Part I - Overview of Ontario's Property Assessment System

Overview of Ontario’s property assessment system

This section highlights the foundation, nature and rationale of the property assessment system in Ontario.

The main topics are:

• History of assessment and taxation in Ontario
• The Ontario model of property assessment

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History of Assessment and Taxation in Ontario

Various forms of property tax have been used throughout history. In Canada, the early system of taxation was a uniform tax based on the value of property owned. Property in Ontario has been assessed for municipal taxation purposes for more than 200 years. This can be roughly divided into three periods – pre-1970, 1970-1997 and post-1997.

PRE-1970

Although property assessment originally came under the jurisdiction of Upper Canada, it was transferred to Ontario municipalities in 1849. Over time, each municipality developed its own assessment system and methods of valuing property. This resulted in inconsistencies in property assessment and the distribution of property taxes. Within a municipality, properties with a similar appearance and value could have very different assessments. There were also very different assessments from municipality to municipality.

In 1963, the Provincial Government appointed the Ontario Committee on Taxation to study taxation and recommend changes. Its report, published in 1967, highlighted many inequities in the assessment system.

1970-1997 – MARKET VALUE ASSESSMENT INTRODUCED

In response to The Ontario Committee on Taxation Report, the Provincial Government assumed responsibility for property assessment in 1970 to create a uniform assessment system for all Ontario municipalities. The Government introduced market value assessment and the new system was offered to municipal governments on a voluntary basis.

Since the new system was voluntary, not all municipalities implemented market value assessment. As a result, property assessments differed from municipality to municipality. This situation was addressed by the Province with the introduction of the Fair Municipal Finance Act, 1997. With this Act, substantial amendments were made to the Assessment Act, the Municipal Act and other related legislation.  This set the stage for the reshaping of Ontario’s assessment and property tax system in 1998.

POST-1997 – ONTARIO FAIR ASSESSMENT SYSTEM

Under the Ontario Fair Assessment System, property assessments across the province were updated to their current value, using a common valuation date.In addition, on December 31, 1998, responsibility for property assessment was transferred to a new, not-for-profit corporation called the Ontario Property Assessment Corporation, later renamed the Municipal Property Assessment Corporation (MPAC). Every municipality in Ontario is a member of MPAC, which is governed by a 15-member Board of Directors comprised of taxpayer, municipal and provincial representatives.

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The Ontario Model of Property Assessment

There are four main components in Ontario’s property assessment and taxation system. Each plays an important role in supporting education and local community services.

• The Provincial Government passes legislation, sets assessment policies and determines education tax rates.
• The Municipal Property Assessment Corporation determines current value assessments and classifications for all properties in Ontario.
• Municipalities determine their revenue requirements, set municipal tax rates and collect property taxes.
• The Assessment Review Board, an independent tribunal, hears assessment appeals from property taxpayers.

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Provincial Government

The assessment and taxation system begins with the legislative framework set by the Government of Ontario. The principal ministry involved in setting assessment legislation is the Ministry of Finance, through the Assessment Act. The Province is also responsible for determining education tax rates as described in Part IV.

In addition to the Assessment Act, MPAC conducts its activities in accordance with the provisions of other acts and regulations, including:

• Assessment Review Board Act
• Municipal Freedom of Information and Protection of Privacy Act
• Municipal Act, 2001
• Education Act
• Municipal Elections Act, 1996
• Municipal Property Assessment Corporation Act, 1997
• Provincial Land Tax Act, 2006
• Local Roads Boards Act
• Northern Services Boards Act
• Payment-in-Lieu of Taxes Act (federal)
• Municipal Tax Assistance Act

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MPAC

MPAC’s main responsibility is to value and classify all property in Ontario for taxation purposes according to the legislation and regulations set by the Provincial Government.

MPAC also provides information on all properties to Ontario’s municipalities, local taxing authorities and the Minister of Finance (non-municipal territory) on annual assessment rolls. The rolls are used to calculate the property and education taxes owed by each property owner with the exception of locality boards of education within non-municipal territory where the rolls are used to calculate education taxes only. Property taxation and its relationship to property assessment is examined in Part IV – Property Taxation.

In addition to administering Ontario’s property assessment system, MPAC collects information for the purposes of preparing provincial jury lists, school support lists and preliminary lists of electors for municipalities.

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Municipalities

Property taxes are the primary source of operating revenue for municipalities and are used to finance local programs and services such as:

• waste and water management;
• parks and leisure facilities;
• police and fire protection;
• social services;
• libraries;
• roads and sidewalks; and
• public transit.

Municipalities set tax rates according to their annual revenue requirements. They are responsible for issuing tax bills, collecting property taxes to support local services and collecting education taxes on behalf of the Provincial Government.

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Assessment Review Board (ARB)

The ARB is an independent, adjudicative tribunal of the Ontario Ministry of the Attorney General. The ARB provides property owners with an opportunity to have an independent review of their property classification or assessment. The assessment appeal process is explained in Part III.

Part II - Preparing Property Assessments

This chapter describes the main features of Ontario’s property assessment system.

The main topics are:

• What is assessed
• How current value assessments are determined

Ontario’s Assessment Act outlines what properties are assessable for taxation. The Act defines real property as:

• Land
• Improvements (such as buildings)

This does not include things like furniture, jewellery, automobiles or other personal property.

In accordance with the Act, all properties are assessed, but some are exempt from taxation and many exemptions have conditions associated with them. Some examples are:

• churches, cemeteries, public educational institutions and public hospitals;
• property owned by some non-profit organizations and charitable institutions such as the Boy Scouts, seminaries of learning and the Canadian Red Cross;
• conservation lands;
• property improvements for seniors or individuals with a disability, who would otherwise have to live in other premises where on-site care is provided;
• property owned by municipalities, provincial and federal governments (payment-in-lieu of taxes).

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How Current Value Assessments are Determined

Ontario is one of the largest assessment jurisdictions in the world. MPAC assesses nearly 4.7 million properties using the most up-to-date technology and tools available in the property assessment industry.

Regardless of the tools used to calculate values, up-to-date property data is key to determining accurate assessments. The following sections explain how MPAC collects this data, how property assessments remain current, how properties are classified and the valuation methods applied for different property types.

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Data Collection

MPAC’s property database, which contains over two billion pieces of data, is one of the most detailed in the world. This data is updated regularly using a variety of sources, including:

• land title documents registered at Ontario Land Registry Offices;
• building permits issued by local municipalities;
• discussions and correspondence with property owners and on-site property inspections;
• dedicated re-inspection programs;
• income and expense information for commercial, industrial and rental properties (such as apartment buildings or hotels); and
• real estate boards.

Under the Assessment Act, a MPAC representative (identified in the Act as an assessor) is permitted to inspect a property and/or request information to assist in preparing the current value assessment. During an on-site inspection, a MPAC representative will observe, record and verify relevant physical details of the property. This may include both an interior and exterior review of the property.  MPAC is permitted to conduct a property inspection provided:

• The assessor (MPAC representative) produces proper identification.
• The inspection is at a reasonable time.

The inspection or request for information is for current value assessment purposes.

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Valuation Date

The valuation date is the fixed day as of which all properties are valued. For assessment purposes, the value of a property reflects market conditions as of that day. This value is used by municipalities when setting property taxes for the following year.  The chart below illustrates the province-wide assessment update cycle since 1997.

Beginning in 2009, eligible increases in current value assessments will be phased-in over a four-year span.  For example, if a property is assessed at $180,000 on its 2005 assessed value and is increasing to $220,000 on its 2008 assessed value, the property will not be taxed on the value of $220,000 until 2012.  The increase will be phased in as follows:

• $190,000 in 2009;
• $200,000 in 2010;
• $210,000 in 2011; and
• $220,000 in 2012.

If a property’s value decreases from its 2005 assessed value to its 2008 assessed value, then it will be taxed at the decreased amount beginning in 2009.  Decreases are not phased-in.

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Current Value

Ontario property values are updated annually to reflect current value if a change occurs to the property.  Otherwise, from 2009-2012, the phased-in assessments stay the same for each of the taxation years to which the valuation date applies. In the Assessment Act, current value is defined as “in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.” This means the price a property might reasonably be expected to sell for, in its current condition, on the open market. For assessment purposes, MPAC refers to this estimated value as “current value assessment.”

Key characteristics of current value assessment are:

• it is the estimated value of a property at a specific point in time;
• it is expressed as a dollar value;
• it assumes a transaction between unrelated parties in the open market, with no advantage being taken by either party; and
• it assumes the property is being used to its highest potential.

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Current Value vs. Sale Price

Current value is the most probable price a property should bring in a competitive and open market under all conditions of a fair sale. While a sale price is a good indication of current value, it is a recognized appraisal principle that a given property can sell at any point within a range of values.  This is because the real estate market is not perfect and two identical properties can sell for different amounts depending on such factors as supply and demand of housing in the local real estate market, preferences of buyers and sellers and the negotiation skills of the parties. A selling price represents the price a buyer and a seller agree to in one particular transaction, whereas current value assessment is based on the most probable sale price based on an analysis of all sales transactions from the local real estate market.

Current Use

In determining the current value assessment of some properties (e.g., farms and managed forests), the Assessment Act requires that the current use of the land be considered, not the potential use of that land in the future. For example, a farm property next to an urban community may sell for future residential subdivision development purposes; however, as long as it is farmed, it will be assessed as a farm.

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Property Classification

All property is assigned a classification according to its use. This is an important part of the assessment and taxation process. The property classification determines the tax rate that will be applied to each property by the municipality.

Since some properties may have multiple uses, portions of a property may be assigned to different classifications. For example, a building with an apartment above a retail store would have the upper portion in the residential class and the lower portion in the commercial class.

There are seven major property classes:

Class 1 — residential
Class 2 — multi-residential
Class 3 — commercial
Class 4 — industrial
Class 5 — pipeline
Class 6 — farm
Class 7 — managed forests

In addition to these major property classes, municipalities may have one or more of the following optional classes:

Class 8   — new multi-residential
Class 9   — office building
Class 10 — shopping centre
Class 11 — parking lots and vacant land
Class 12 — large industrial
Class 13 — professional sports facilities

Some of these major and optional classes are further defined by specific sub-classes. 

Five additional property classes were created by the Province of Ontario to ensure that the business education taxes paid by commercial and industrial properties constructed after March 2007, will be subject to a maximum rate of 1.60 per cent.

Commercial (new construction)

Office building (new construction)

Shopping centre (new construction)

Industrial (new construction)

Large industrial (new construction)

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Approaches to Value

There are three common approaches for determining the current value of any property and for determining current value assessments: the sales comparison approach, the cost approach and the income approach. The following chart outlines the property types commonly valued using each approach.

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Sales Comparison Approach

In Ontario, over 90 per cent of properties are valued using the sales comparison approach. This approach provides a dependable indication of current value and is best suited to residential properties and other types of property that sell often on the open market.

The sales comparison approach to value estimates the current value of a subject property by adjusting the sale prices of comparable properties for differences between the comparable properties and the subject property.

In addition to sales, MPAC experts regularly analyze property information through a number of sources, including:

• land title documents;
• building permits;
• on-site property inspections and communication with property owners;
• income and expense information (for apartment buildings or hotels); and
• real estate boards.

MPAC’s database contains over two billion pieces of data, and is one of the most detailed in the world. Like all assessing authorities, MPAC is able to determine accurate values for large groups of properties based on common data and mass appraisal techniques. In addition to recent sales, MPAC looks at the key features of every property. Although as many as 200 different factors are considered when assessing the value of a residential property, there are five major factors that account for 85% of the value:

• location;
• lot dimensions;
• living area;
• age of the property, adjusted for any major renovations or additions; and
• quality of construction.

Other key features that affect value include:

• secondary structures such as garages, boathouses and pools;
• basement area (finished & unfinished);
• type of heating;
• air conditioning;
• number of bathrooms; and
• fireplaces.

Site features can also increase or decrease the assessed value of your property. These include:

• traffic pattern;
• proximity to a golf course, hydro corridor, railway or green space; and
• whether or not the property is located on a corner lot.

Location

Under Current Value Assessment, recent sales of similar properties are analyzed and used as an indicator of the value of residential properties. Location is the most important factor in determining the assessed value of any property. MPAC analyzes every property and land sale transaction in Ontario. MPAC divides the province into approximately 140 market areas and then further divides each of those areas into neighbourhoods and sub-neighbourhoods to evaluate the degree to which location infl uences the market area. For waterfront properties MPAC typically looks at the entire lake or a group of similar lakes. For condominiums, each condo plan is typically considered its own neighbourhood.

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Cost Approach

The cost approach is based on the theory that an informed purchaser would not pay more for a property than it would cost to produce a substitute of equal utility, assuming no costly delay in construction. It is often referred to as the “bricks and mortar” approach and includes several steps.

• First, a current value for unimproved land is determined using the sales comparison approach.
• Then, the replacement cost of fully functional modern improvements comparable to existing buildings is calculated. MPAC uses its up-to-date construction cost database together with the physical property information, such as building size and construction materials, to determine a replacement cost.
• Next, all accrued depreciation to the existing property is determined from physical, functional and economic conditions, both within and external to the property.
• Finally, the land value is added to the building cost and depreciation is deducted, resulting in a current value assessment for the property.
• As a final check, the calculations are compared to actual sales to ensure the accuracy and quality of the overall product.

The cost approach is a long-established technique, which can be applied to properties that are structurally diverse (e.g., industrial buildings), where rental data is typically not available, or as a supplement to other approaches to value.

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Income Approach

The income approach presumes the value of certain properties can be determined by estimating the present value of all future benefits. Future benefits typically include net income generated by the property and the proceeds from the sale at the end of the investment.

Income valuation techniques vary by property type but, in simplest terms, they generally include the same fundamental steps.

• First, market rents are determined to establish the potential revenue generation of theproperty.
• Then, vacancy and legitimate expenses incurred to maintain the property are deducted from the rent to calculate net operating income.
• Finally, the net operating income is converted into an estimate of value using a market capitalization rate. The capitalization rate is determined from an analysis of market transactions and a variety of other market and financial information.

The income approach is ideally suited for larger investment types of properties such as office buildings, shopping centres, hotels and apartment buildings. MPAC determines current value assessments for these properties using the same techniques practiced by vendors, purchasers and their financial advisors.

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Regulated Rates

Some types of properties are difficult to assess using the three approaches to value because:

• they seldom trade in the marketplace;
• when they do trade, the sale price usually includes non-assessable items that are difficult to separate from the sale price;
• they cross municipal boundaries; and/or
• they are of a unique nature.

To arrive at assessed values for these types of properties, regulated rates may be assigned by the Province of Ontario. Types of regulated properties include power generating stations and linear properties such as railways.

Generally, linear properties include distribution lines or other facilities that travel across municipal boundaries. Some examples include: railway rights-of-way, gas pipelines and electricity transmission or distribution rights-of-way.

The Province of Ontario also determines regulated rates to be used for determining the assessments of managed forest properties.

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Farmland Valuation

Accurate farmland values in Ontario are determined by extensive analysis, using only farmer-to-farmer sales as legislated by section 19(5) of the Assessment Act. Farm values are based on the land’s productive capability and other factors such as climate and location. It’s important to note that the value of a farm is not based on the land’s potential use (e.g., development).

Properties that are used farmed by the owner and/or tenant are valued using bona fide farmer-to-farmer sales. The primary factors used in determining a farm’s current value assessment include the following:

Although MPAC may assess a property as a farm, it is taxed at the residential rate unless placed in the Farm Property Tax Class by the Ontario Ministry of Agriculture, Food and Rural Affairs. Additional information about the Farm Property Tax Class is available at www.omafra.gov.on.ca/english/policy/ftaxfaq.html or by contacting the Ontario Ministry of Agriculture, Food and Rural Affairs at 1 800 469-2285.

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Part III - Beyond Assessed Value

This chapter describes the assessment process after current value assessments are determined.

The main topics are:

• Property Assessment Notices
• Annual Assessment Rolls
• Omitted or supplementary property assessments
• Property owners’ rights to assessment information
• Resolving assessment concerns

Once the property classifications have been assigned and current value assessments determined, MPACissues Property Assessment Notices. The information contained on each Notice is also provided to municipalities/local taxing authorities on annual assessment rolls.

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Property Assessment Notices

Each Property Assessment Notice sent by MPAC, accompanied by an explanatory insert, contains the property’s assessment roll number; the owner(s) names and those tenants directing school support; property location and/or legal description; property classification; current value assessment; phased-in amount for each year of the four-year assessment cycle (excluding non-municipal territory outside locality boards of education); school support designation (excluding non-municipal territory outside locality boards of education); and additional property information.  Click here to view a sample Property Assessment Notice.

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Annual Assessment Rolls

The information contained on each Property Assessment Notice is provided to municipalities/local taxing authorities in December on assessment rolls. The phase-in assessment for the particular taxation year is included on the rolls and used by municipalities/local taxing authorities to calculate the following year’s property taxes.

The following are some examples of the information found on the assessment rolls.

• Description of the property
• Property owner’s name(s) and mailing address
• Current value assessment (2005 and 2008)
• Phased in amount for the particular tax year
• Property classification
• Name of every residential tenant who is a supporter of a school board
• School support of owners and tenants (excluding non-municipal territory within locality boards of education)

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Omitted or supplementary property assessments

Between annual assessment rolls, changes to properties continue taking place; new homes are constructed, owners renovate, additions are built, the use of the property changes, etc. Provincial legislation allows municipalities to collect property taxes on these changes and improvements through the omitted or supplementary assessment process as soon as they begin to be used.

MPAC assists with this process by visiting properties with changes to determine the current value assessment of the improvements.

Once the current value assessments of the improvements have been determined, MPAC notifies municipalities throughout the year by issuing omitted/supplementary assessment listings. Municipalities use these listings to update the taxes owing on the improvements and/or changes. MPAC also advises property owners of the change in their current value assessment or classification by mailing Omitted or Supplementary Property Assessment Notices.

• Omitted Property Assessment Notices are issued when the current value assessment for an improvement (e.g., a new home or addition) was not previously recorded on the annual assessment roll. When an omitted assessment is added to the roll, the municipality can collect property taxes for the current year and, if applicable, for any part or all of the previous two years.
• Supplementary Property Assessment Notices are issued when there has been a change to a property during the current taxation year due to a change in property classification, an addition, renovation or new construction. When a supplementary assessment is added to the roll, the municipality can collect additional property taxes from the date the use commences to the end of the current taxation year.

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Property Owners' Rights to Assessment Information

Property owners have the right to know the information MPAC maintains about their property. They are also entitled to receive information and assistance to help them understand their assessment.

A property owner can obtain detailed information about their property and information on up to 24 additional properties of their choice and up to six selected by MPAC, free of charge. 

Contact MPAC for more information or visit AboutMyProperty™.

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Resolving Assessment Concerns

Property owners have several options for resolving assessment concerns.

Contact MPAC

As a first step to resolving assessment concerns, property owners are encouraged to contact MPAC to verify details about their property, ask questions about their current value assessment or request information about other similar properties.

If they believe that important information may not have been considered when the current value assessment for the property was determined, they may wish to have MPAC review it through the Request for Reconsideration process.

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Request for Reconsideration Process

There is no charge for filing a Request for Reconsideration (RfR) with MPAC.  If a property, or portion of it, is classified as residential, farm or managed forest, property taxpayers must first file a RfR with MPAC before being eligible to file an Appeal with the Assessment Review Board (ARB).  See Appeal Process for further details. RfRs can be filed any time before March 31 of the tax year for which the assessment applies.

A RfR must be submitted in writing and can only be filed by the owner of the property. The preferred method is to complete a RfR form.  Contact MPAC or click here to download a form. It is important to include the basis for the review and all relevant facts, such as property comparisons, sales information, rental data, farm leases, etc.

Some reasons for filing a RfR are:

• the assessed value of the property appears to be different than similar properties in the area;
• the property has been incorrectly classified;
• a person is wrongly placed on or left off the assessment roll;
• the school support is incorrect;
• MPAC’s records are incorrect (e.g., wrong lot size, building area);
• the property was purchased close to the valuation date for a significantly different amount than the assessed value;
• the value, classification or effective date on the Omitted or Supplementary Property Assessment Notice is incorrect; and
• there are factors that negatively impact the property’s current value, which may not be reflected in the current value assessment.

Upon receipt of the RfR, MPAC will:

• Provide a standard disclosure package which includes details about how the property was assessed.  For most residential properties, this will include:
• Subject Property Profile
• Property Assessment Details
• Acknowledgement letter
• Review the concerns and may contact the owner for more information.
• Review the assessed values and sales information for other comparable properties in the area.
• Verify the property details including:
• property size and location;
• structural details such as building area, condition, finished basement, number of bedrooms, bathrooms, etc.; and
• other factors which may impact the current value of the property such as proximity to a major commercial or industrial property, etc.
• Review the property for changes since MPAC’s last visit. Any changes are taken into consideration and quite often a follow-up inspection is arranged with the property owner.

Once these steps have been completed, MPAC confirms the outcome of the review by providing the property taxpayer with a written response. MPAC will respond to the RfR by September 30 of the taxation year, unless the property taxpayer and MPAC agree to an extension to November 30. 

The deadline for filing a RfR is March 31 of the tax year.

Click here to download the RfR form or contact us.

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Assessment Review Board Appeal

Property taxpayers may also file an appeal with the Assessment Review Board (ARB). The ARB is an independent, adjudicative tribunal of the Province of Ontario reporting through the Ministry of the Attorney General.  Their main function is to hear appeals from people who believe that properties are incorrectly assessed or classified.

An appeal can be filed by anyone – an owner, tenant, corporation, partnership, municipality, school board or person acting as a representative on a property owner’s or tenant’s behalf. An appeal can also be filed by a third party on any property.

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Appeal Process

There are specific application forms and associated fees for filing an appeal with the ARB. The Government of Ontario has recently implemented a number of changes to the process.

Residential, Farm and Managed Forest Properties

If a property, or a portion of it, is classified as residential, farm or managed forest, property owners must first file a Request for Reconsideration by March 31 of the tax year with MPAC before being eligible to file an appeal with the ARB.  Property owners then have 90 days after MPAC has notified them of its decision on the Request for Reconsideration to file an appeal with the ARB.

ARB appeals can be filed over the Internet, by fax or by mail.

E-File:    www.arb.gov.on.ca

Fax:    416 645-1819 or 1 866 297-1822

Mail:

Assessment Review Board
655 Bay Street
Suite 1500
Toronto, ON
M5G 1E5

Specific application forms and ARB fees are involved.  Property taxpayers will also have to appear at an ARB hearing to support their position.  MPAC will also appear at the hearing.

The ARB will acknowledge receipt of each appeal in writing. Approximately four weeks before the assessment hearing is scheduled, a Notice of Hearing is mailed to the appellant, MPAC and the municipality/local taxing authority indicating the date, time and location of the hearing. Assessment hearings are normally held at a location in or as close as possible to the municipality/local taxing authority in which the property is located.

Other Property Types

For all other property types, filing a Request for Reconsideration with MPAC is not the mandatory first step before being eligible to file an appeal with the ARB.  Also, if a person is not entitled to file a Request for Reconsideration, e.g. a tenant, then that person may appeal directly to the ARB, no matter the property type.

The deadline for filing a Request for Reconsideration or an appeal is March 31 of the tax year.

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Hearing Process

At the hearing, the presiding ARB member hears the appeal and evaluates the evidence presented. Most property owners represent themselves at the hearing, but in some cases they may appoint someone to represent them, with appropriate authorization.

During the hearing, both MPAC and the appellant have an opportunity to present their evidence. The municipality or another interested party may also participate in the hearing.

At an ARB hearing, the onus is on MPAC to first prove the accuracy of the assessed value.  MPAC will present comparable properties as evidence and will share that information with the property taxpayer prior to the hearing. 

After all parties have had an opportunity to present their information and summarize their arguments, the presiding ARB member will render a decision based on the evidence. This decision is confirmed through a Notice of Decision which is mailed to the appellant, MPAC and the municipality.

Upon receipt of the Notice of Decision, MPAC will update its records. If the Notice indicates a change to the classification or current value assessment of the property, the municipality will adjust the property taxes accordingly.

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Review of ARB Decision

Decisions of the ARB are final and binding on all parties for the entire taxation year to which the assessment applies.

MPAC has also committed to carrying forward the decision to future tax years unless new information indicates the adjustment is no longer warranted.

It is possible to request the Board to review its decision. The ARB’s Rules of Procedure outline the criteria and steps for requesting a Review of Decision.

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Leave to Appeal

A decision of the ARB may be appealed to the Divisional Court, a branch of the Superior Court of Justice, only on questions of law (e.g., interpreting the meaning of a specific section(s) of the Assessment Act). To initiate this process, the appellant must apply to the Court and seek leave to appeal. Parties should consult legal counsel to explore this option.

When to contact the municipality/local taxing authority

It is important to remember that MPAC is responsible for determining current value assessments. Municipalities/local taxing authorities are responsible for property taxation. Questions or concerns about municipal services, property taxes and tax bills should be directed to the municipality/local taxing authority where the property is located as they cannot be resolved through the RfR or ARB appeal processes.

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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

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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.

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.

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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.

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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

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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.

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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
• Statute Labour Board rates

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.

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Conclusion

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

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