Small Business Property Tax Subclass Review

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The decision

2023-10-11 · Toronto City Council · adopted

As filed

City Council on October 11 and 12, 2023, adopted the following: 1. City Council amend the definition of Eligible Property to exclude land that is classified within the commercial property tax class but that does not contain an affixed building or structure. 2. City Council amend the criteria for inclusion in the Small Business Property Tax Subclass to require that an eligible property must have a minimum current value assessment of $10,000, in addition to a maximum prescribed current value assessment of either $1,000,000 or $7,000,000, depending on the property's geographic location.

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3. City Council request the Chief Financial Officer and Treasurer to: a. report to the Executive Committee before the end of 2023 on the feasibility and financial and tax rate implications of devising a means to allow property owners and business tenants of strip plaza-type properties (as defined) to qualify for the small business subclass tax rate reduction, effective for the 2024 taxation year; and b. take into account the financial and tax rate implications of including these additional properties within the small business subclass in determining final property tax rates for the commercial class for the 2024 taxation year. 4. City Council request the Minister of Finance to include an assessment of the appropriateness of using "highest and best use" as a valuation principle on their assessment of commercial properties, as opposed to using "current and actual use" in the Government of Ontario's review of the property assessment system deployed by the Municipal Property Assessment Corporation.

On the agenda

As the city filed it

At its meeting of November 9, 10 and 12, 2021 meeting, Toronto Council adopted, with amendments, Item EX27.7: Implementing a Small Business Property Tax Subclass . Council also approved the criteria and processes to identify eligible properties, as well as processes to address requests for reconsideration, appeals and other provisions related to the implementation and administration of the subclass. In its consideration

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of this item, Council also directed the Chief Financial Officer and Treasurer, in consultation with the City Solicitor, to report back in 2023 on: - the quantity, size and valuation of subclass-eligible versus overall commercial properties and a statement of inter-ward balancing of tax relief for the subclass; the implications of including all Business Improvement Areas to the geographic areas covered under the subclass; - developing additional criteria and/or an application-based system that would allow for strip malls, which have small businesses as tenants, to be eligible for inclusion in the subclass; and - developing an application-based system that would allow for additional small commercial properties which fall outside of the current eligibility criteria of the subclass to be included within the subclass In addition, at its June 8, 2022 meeting, in its consideration of Item EX33.5: Status of Small Business Property Tax Subclass Implementation , the Executive Committee directed the Chief Financial Officer and Treasurer, in consultation with the Chief Communications Officer, Strategic Public and Employee Communications and the General Manager, Economic Development and Culture, to develop a public awareness campaign on the tax reduction benefits of the small business property tax subclass specifically focusing on tenants in gross leases. In response to these directions and after conducting a program review, staff have examined mechanisms to better define the eligibility requirements of the subclass.

Staff recommended

The Interim Chief Financial Officer and Treasurer recommends that: 1. City Council amend the definition of Eligible Property to exclude land that is classified within the commercial property tax class but that does not contain an affixed building or structure. 2. City Council amend the criteria for inclusion in the Small Business Property Tax Subclass to require that an eligible property must have a minimum current value

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assessment of $10,000, in addition to a maximum prescribed current value assessment of either $1,000,000 or $7,000,000, depending on the property's geographic location.

Considered

2023-10-03 · Executive Committee · amended
Decision as filed
The Executive Committee recommends that: 1. City Council amend the definition of Eligible Property to exclude land that is classified within the commercial property tax class but that does not contain an affixed building or structure. 2. City Council amend the criteria for inclusion in the Small Business Property Tax Subclass to require that an eligible property must have a minimum current value assessment of $10,000, in addition to a maximum prescribed current value assessment of either $1,000,000 or $7,000,000, depending on the property's geographic location.
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3. City Council request the Chief Financial Officer and Treasurer to: a. report to the Executive Committee before the end of 2023 on the feasibility and financial and tax rate implications of devising a means to allow property owners and business tenants of strip plaza-type properties (as defined) to qualify for the small business subclass tax rate reduction, effective for the 2024 taxation year; and b. take into account the financial and tax rate implications of including these additional properties within the small business subclass in determining final property tax rates for the commercial class for the 2024 taxation year. 4. City Council request the Minister of Finance to include an assessment of the appropriateness of using "highest and best use" as a valuation principle on their assessment of commercial properties, as opposed to using "current and actual use" in the Government of Ontario's review of the property assessment system deployed by the Municipal Property Assessment Corporation.
2023-10-11 · Toronto City Council · adopted

On the record

The item as the City filed it

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