Updated July 2017

New Rules in Ontario

The Assessment Review Board (“ARB”), which provides the first and only level of administrative law review of assessment appeals in Ontario, has changed its rules.

The ARB new rules are effective April 1, 2017. There are 122 rules and several Practice Directions.  Most significantly, all appeals will be grouped as either “General” or “Summary”.  General proceedings have a detailed schedule to be adhered to unless it is altered by the parties with the consent of the ARB. All appeals are deemed to be general proceedings unless they are specified as summary proceedings.  The details include specified hard dates for inspections, productions, examinations for discovery, motions, exchange of witness statements and reports.

All of this means that the litigation before the ARB will be increasingly complex and rule-bound. It is not an area for amateurs. 

J. Bradford Nixon
Nixon Fleet & Poole LLP
American Property Tax Counsel (APTC)

Canada Property Tax Update Archive

UPDATED SEPTEMBER 2016

Supreme Court of Canada Releases Property Tax Decision

The Supreme Court of Canada is taking an increasing interest in property tax cases, granting leave to appeal in City of Edmonton v. Edmonton East (Capilano) Shopping Centres Limited 2015 CanLII 55288 (SCC)(decision pending), and recently releasing a judgment in Musqueam Indian Band v. Musqueam Indian Band (Board of Review), 2016 SCC 36. Despite the property tax context, the court’s attention in both cases is largely directed to overarching legal principles relevant to administrative law (Edmonton) and aboriginal law (Musqueam).

2017-2020 Ontario Assessment Cycle

In preparation for the beginning of a new four-year assessment cycle in Ontario (2017-2020), the Municipal Property Assessment Corporation released preliminary valuation summaries for certain special purpose, industrial and commercial properties. This effort to engage in consultation with taxpayers prior to the official release of the assessment roll has resulted in negotiated resolutions of certain tax matters before the release of official assessment notices.

Belinda Schubert A.B., J.D.
Nixon Fleet & Poole LLP 
American Property Tax Counsel (APTC)

 

Updated June 2013

Change in Ontario

As a result of recent decisions by the assessment authority (MPAC) the provincial legislature in the recent Ontario Budget established a Review of the assessment function with particular reference to assessment methodologies applied to special purpose business properties such as mills (in Northern Ontario), industrial lands (in Toronto), landfills and billboards (outdoor signage).

Each of these items has become a hot political issue. A recent decision of with which we were involved that allowed substantial obsolescence on paper mills has crippled of the assessment base of a number of Northern Ontario municipalities.
Industrial lands in Toronto have been revalued based on highest and best use. Landfills have been reassessed based upon the licenses permitting the landfill sites to operate.

Billboards have become the subject of outrageous assessments placed upon advertising in isolated circumstances within the province.

All of these issues are subject to the Review.

Richard N. Poole
American Property Tax Counsel (APTC) - Canada

 

Updated December 2012

Provincial Reassessments in Canada

All properties in the province of Ontario are being reassessed to a January 1, 2012, valuation date for taxation years 2013-2016. The appeal deadline is April 1, 2013.

The appeal deadline in the province of British Columbia is January 31, 2013. This relates to the first level of appeal to the property assessment review panel from which a further appeal may be taken to the property assessment appeal board.

The condition date for properties in the province of Alberta is December 31, 2012, and appeals must be made to the Assessment Review Board within 60 days of the date the assessment notice is sent to the taxpayer.

All properties in the province of Quebec are reassessed on a triennial cycle and the assessment must be appealed prior to April 30th of the first year of the new cycle. The reassessments are staggered so that about a third of the municipalities are reassessed each year.

Each of these four major provinces has ad valorem property taxation systems.

American Property Tax Counsel (APTC) - Canada

 

Updated March 2012

Ontario Assessment Appeal Deadline: April 2, 2012

The Province of Ontario is Canada's industrial and financial heartland. In Ontario, all properties were assessed to a January 1, 2008 valuation date for taxation years 2009-2012.

If your property in Ontario was not appealed, then there is still an opportunity to appeal for the 2012 tax year, however, the deadline for filing such appeal is April 2, 2012.

All properties in the Province of Ontario will be reassessed again as of the January 1, 2012, valuation date for taxation years 2013-2016. Property owners will receive preliminary Notices of Assessment throughout the 2012 year and we strongly urge that those assessments be reviewed to determine whether or not there is merit in proceeding with an appeal.

An appeal for 2013 will set the base for the four year cycle of assessment and taxation (2013-2016).

American Property Tax Counsel (APTC) - Canada

 

Updated March 2010

Fee Simple, If Unnumbered - The Saga Continues

The ongoing litigation interpreting the charging section of the Ontario Assessment Act as it defines “current value” (market value) continues.

At issue is the meaning of “fee simple, if unencumbered” as the basis of establishing that value. It has been alleged by the assessment authority that it is a valuation concept incorporated into the legislation. As taxpayers, we are alleging it as a legal interest defined. At issue is whether in valuing significant commercial office buildings it is appropriate to value those buildings as vacant given that the direction to establish value utilizing a fee simple interest, if unencumbered contemplates vacant possession on closing. The taxpayers were successful at the first level (Assessment Review Board). The decision of the Assessment Review Board, however, was overturned by the Divisional Court (first level of appeal). Leave to appeal has been granted, however, to the Ontario Court of Appeal (the equivalent of a State Supreme Court) and the issue will ultimately be determined by that court. Needless to say, millions of dollars are at stake as the decision if favourable to the taxpayers seriously disrupts the valuation principles utilized by the assessment authority for the valuation of significant commercial and industrial property throughout the Province. It is anticipated that the appeal will be heard at the Court of Appeal in June 2010.

Richard N. Poole
American Property Tax Counsel (APTC) - Canada

 

Updated March 2009

Assessment in Ontario

The notices are out for the reassessment for 2009 taxation based on a January 1, 2008 value. In previous articles, we have raised issues as to where that may lead given the present economic circumstances facing North America.

What we must now be alerted to is not only the value as determined but also the implementation of the "phase-in" and tax capping regimes now within the discretion of the local municipalities. The legislative scheme has changed dramatically as a result of the new reassessment to allow a phase-in of those values for commercial/industrial properties over a four-year period upon which is placed a municipal tax capping/clawback regime.

What is extremely important to note is that not only does an appeal with respect to the assessment returned for 2009 impact the base 2008 value, the appeal may also reference the 2005 value set forth in the Notice of Assessment as the benchmark for the "phase-in".

A right of appeal exists with respect to that benchmark valuation, particularly in circumstances in which it is something other than that originally established for the 2006/2008 cycle. It is complexity on top of complexity. The last date for appeal for the 2009 taxation year is March 31, 2009.

American Property Tax Counsel (APTC) - Canada

 

Updated December 2008

Increasing Assessments in a World of Declining Market Values

All properties in the Province of Ontario, the industrial and commercial heartland of Canada, have been reassessed to a January 1, 2008 valuation date for a four-year cycle of taxation years: 2009-2012.

Increases in commercial and industrial values generally range from 40-60 per cent from 2005 to January 1, 2008, while property values after January 1, 2008 are declining significantly. The tax increases flowing from the very significant assessment increases from the last reassessment in 2005, will be phased-in over four years. The divergence between increased assessment values and declining market values will create significant problems for taxpayers.

In Ontario, despite the statutory valuation date of January 1, 2008, there may be very good opportunities to bring forward evidence related to the decline in market value arising from current economic conditions, and achieve reduced assessments and taxation

American Property Tax Counsel (APTC) - Canada

 

Updated September 2008

New Principles of Current Value for the Year 2009

The updated assessment cycle is bringing to bear new principles for the valuation of properties in the Province of Ontario.

The statutory definition has not changed but the assessment practices, policies and procedures may have.

There is an attempt at least conceptually for the Municipal Property Assessment Corporation ("MPAC") to look more closely to values in exchange as opposed to the traditional direction based upon the present use of property being assessed. This has positive and negative effect.

Such an approach allows MPAC to have regard to the highest and best use substituting a highest and best use approach to the assessment based on present activity on site. One can easily imagine how speculative the analysis of an assessment authority might become as it targets properties which it believes are underutilized.

For certain industrial sectors, however, those particularly improved with older industrial facilities, the concept of alternative highest and best use can be of significant benefit. Traditionally, using a replacement cost approach, MPAC has argued strenuously against appropriate functional and economic obsolescence being accorded. The new approach may open negotiation for a more realistic recognition of those adjustments without the need, as in the past, to move forward in litigation. In many respects, only time will tell.

Notices of Assessment for the 2009 assessment cycle are being mailed between September 15th and November 17th, depending on the area of the province in which the properties are situated. It is important to closely monitor receipt of the Notices of Assessment as they will reflect the reassessment to the 2008 base year value.

Given the predisposition now of MPAC as it claims to look more closely to "true value", substantial changes from the 2005 base assessment can be anticipated.

The actual interpretation of the statutory definition of "current value" continues to be under judicial review after the determination by the Assessment Review Board that the statutory transaction contemplated vacant possession on closing as the basis of establishing the current value assessment. Resolution of that issue based upon the reasoning of the Assessment Review Board would further direct MPAC to even more substantial adjustment in establishing values based on the "true value" of the real estate.

American Property Tax Counsel (APTC) - Canada

 

Updated June 2008

Ontario Calls for Assessment Update

The reassessment cycle in Ontario calls for an updated assessment for taxation year 2009 based upon a current value determined to a base January 1, 2008. The assessment authority is in the field updating assessments to reflect that value.

The determination of the current value of the property forms the basis of its assessment. Current value is a statutorily defined term that requires the establishment of that value based upon a determination of the fee simple, if unencumbered estate, in the real estate. The result of that specific definition is to establish values that may well be at variance with values determined either by the sale of the property as a going concern or for investment purposes, or for financing.

Although the assessment is established in that manner, the recent legislative change to the Assessment Act allows the taxpayer the protection of equity of assessment as well as the correct determination of the current value of the property.

A property is fairly assessed either if it is assessed at its current value or if it is assessed equitably with respect to other properties in the municipality. The equity argument cannot be used by the assessment authority to defend an assessment which exceeds the current value of the property. The equity argument can be used by the taxpayer to obtain a reduction in assessment even if the property is valued at less than its current value if by achieving such reduction it is equitably assessed with other purportedly underassessed properties.

The legislative amendment was triggered by activities of certain of the local municipalities within the Province that initiated appeals against assessments based upon sales transactions of those properties higher than the assessments as established by the assessment authority. Provided those properties are equitably assessed, those appeals by those local municipalities will no longer expose taxpayers to increased taxation.

Clearly the amendments do not create a uniformity scheme of assessment but rather a shield for the taxpayer against targeting by other stakeholders in the property tax regime. The amendments further protect the right of appeal and limit potential abuse by the assessment authority.

American Property Tax Counsel (APTC) - Canada

 

Updated December 2007

New Rules to Follow for Property Tax Consultants

The Province of Ontario is Canada's largest province with the country's largest assessment base. It recently legislated that taxpayers' representatives and consultants on property tax and assessment appeals, must be registered with The Law Society as paralegals. A code of professional conduct is prescribed, there are minimum insurance requirements and the paralegals will be subject to the testing discipline process of the Law Society.

Only those persons who are lawyers or licensed paralegals will be permitted to represent taxpayers. This is a radical and dramatic change in the representation on property tax assessment appeals.

Those companies of property tax and assessment consultants now working in the field, must restructure their business affairs so that representation will not be conducted by a business corporation. Accountability between the client and the paralegal will become paramount.

Other provinces in Canada are watching this development and may well follow suit.

American Property Tax Counsel (APTC) - Canada