While Ontario’s 2020 Budget is focused on the Province’s fight and recovery from COVID-19, the Budget also includes measures that respond to NAIOP and industry advocacy efforts over the past number of years. Of particular interest to NAIOP members are these key Budget proposals:
Business Education Tax (BET) Rates
NAIOP Greater Toronto and our industry partners have been advocating for a lower and uniform Business Education Tax (BET) rate for the province for several years. While the government equalized the residential education tax in 1998, ensuring that all Ontarians pay the same rate, it did not harmonize the business portion at the same time. This resulted in regional tax inequities and harmed business competitiveness.
In Budget 2020, the government is proposing to finally resolve this issue. Starting in 2021, Ontario will lower all high BET rates across the province to 0.88% for commercial and industrial properties. With this change, 94% of all business properties in Ontario will see a reduction in their BET. For those subject to the highest rates, the new rate represents a reduction of up to 30%. For businesses in Toronto, this represents an approximately 10% reduction in BET.
This is a great result for NAIOP, its members and the broader Ontario economy.
Speculative Sales (Highest and Best Use Assessment)
NAIOP Greater Toronto has been actively involved in the Province’s Property Assessment and Taxation Review to address the ongoing taxation issues related to “highest and best use” assessments.
In Budget 2020, the province is taking the first step towards resolving this issue. It will be amending the Assessment Act to support the creation of optional new assessment tools to address concerns regarding speculative sales. It is not clear what these tools would be. The Ministry of Finance will continue to consult through the Review and NAIOP will continue to participate and provide advice on behalf of our members.
Property Tax Relief for Small Business
Starting in 2021, the Budget proposes giving municipalities the power to adopt an optional property sub-class for small businesses. Municipalities will be responsible for defining small business eligibility and the extent to which the property tax rate will be reduced. The province will consider matching these municipal property tax reductions to provide further support to small businesses.
The challenge will be how the small business class is defined and the potential for taxes to be raised on other classes of business. As a result, NAIOP will have to work closely with the City of Toronto should the City decide to exercise its new powers.