eVoice 2018-15 — Small-Scale Value-Added farms update

May 7, 2018

SMALL-SCALE VALUE-ADDED FARMS -- UPDATE

The Ministry of Finance has provided OMTRA an update on the latest developments regarding the property tax treatment of small-scale value-added and commercial activities on farms.

As you may be aware, the 2017 Economic Outlook and Fiscal Review announced that starting in 2018, municipalities will have the option to reduce the property tax rate on qualifying value-added activities that occur on farms as part of the farming business. The intent of this initiative is to provide sustainable property tax treatment to farmers who diversify their operations by engaging in small-scale processing or retail activities as a direct extension of their farming business.

Regulations enabling municipalities to implement this new initiative have now been finalized, effective for the 2018 taxation year.

Amendments to Ontario Regulation 282/98 under the Assessment Act were recently finalized, creating optional new subclasses under the industrial and commercial property classes. These new subclasses include the first $50,000 of assessed value of qualifying value-added and commercial activities on farms. This new regulation is available to view at: www.ontario.ca/laws/regulation/r18361

Amendments to Ontario Regulation 73/03 under the Municipal Act, 2001 provide single and upper-tier municipalities with the option to set a tax rate for these subclasses that is 75 per cent lower than the industrial or commercial tax rates that would otherwise apply. This new regulation is available to view at: www.ontario.ca/laws/regulation/r18363

The Province is also reducing the education tax rate for all eligible properties, regardless of whether municipalities choose to adopt the subclasses for the municipal portion of the property tax. In order to ensure consistency across Ontario, the Province has set the 2018 education tax rate for the subclasses at 0.00272500. This represents a 75 per cent reduction of the current business education tax (BET) target rate. This new regulation is available to view at: www.ontario.ca/laws/regulation/r18362

Over the coming months, MPAC will begin to identify properties and issue amended assessment notices for affected properties. Municipalities will then be in a position to make any property tax adjustments to affected property owners.

If you would like additional information regarding this initiative, please feel free to contact Leigh Boynton, who can be reached at 416-327-0476 or by email at Leigh.Boynton2@ontario.ca