CHANGES TO PROPERTY TAX REBATES (June 1999)

Bill 16

The City of Toronto was the only municipality to adopt the 2.5% property tax cap permitted under Bill 16 [see Volume III, Issue 4, p.17] and is therefore not affected by Bill 79, the Property Tax Payers Protection Act, 1999. All federally registered charities located in commercial or industrial properties in Toronto are still eligible to receive a minimum property tax rebate of 40%.

Bill 79

Property tax increases for commercial and industrial buildings in all other municipalities are limited under Bill 79 to 10% in 1998, and 5% in 1999 and 2000, or other previously permitted phase-in techniques that achieve the same result. Charities in buildings affected by these increases are eligible for a tax rebate equal to 40% of any tax increase. The Province will be governing the rebate program to ensure that municipalities issue rebates on or before April 30, 1999 for the 1998 tax year, on or before June 30, 1999 for the 1999 tax year and on or before June 30, 2000 for the 2000 tax year.

Further complications may arise in circumstances where municipalities have already issued tax rebates under Bill 16. These rebates may now be in excess of what is permitted under Bill 79. Charities who received these rebates were required to repay the municipality a sum equal to the rebate by April 30, 1999. Municipalities may reduce this debt by the new rebate amount under Bill 79.

Implications

Charities with gross leases may have overpaid their landlords for 1998 property taxes. Landlords will soon be receiving revised tax statements from their municipalities. Within 30 days of receipt of the statements landlords must notify tenants of adjusting amounts and refund any overpayment by tenants.

Charities with net leases will hopefully soon hear what compensation programs will be set-up for overpayment of property taxes.

Summary

The details of the property tax rebate program are much more complicated than they appear here. We recommend that all federally registered charities contact their municipalities to find out about application requirements, deadlines and to obtain information on how rebates will be paid.