Ontario’s 2024 Budget Delays Property Tax Reassessment

On March 26, 2024, the Ontario provincial government unveiled the 2024 Ontario Budget: Building a Better Ontario (“2024 Budget”). Among other things, the 2024 Budget deferred the next property tax reassessment indefinitely.

The most recent Ontario property tax reassessment occurred in 2017, with all property assessment values based on a current value as of January 1, 2016. That reassessment was to last for four years, with a further reassessment set to take place in 2021, using updated current value assessments. However, due to the COVID-19 pandemic, the 2021 reassessment was postponed and thereafter it was postponed again… and again… and again, with the provincial government stating that its priority was “maintaining stability for taxpayers and municipalities.”

Continued Uncertainty

In our previous article published July 28, 2023, Ontario’s Next Property Reassessment Remains Uncertain, it was noted that, by the summer of 2023, industry and municipal organizations had had enough of these postponements and urged the premier to move forward with the long-overdue reassessment – but to no avail. On August 10, 2023, the provincial government announced that it was again postponing the province-wide reassessment for 2024 to enable it to conduct a review focusing on “fairness, affordability and business competitiveness” in order “to enhance the transparency and equity of future assessments.”

In the 2024 Budget, the provincial government repeated its intention to conduct a review of the property assessment and taxation system and stated that:

Consultations have commenced to seek input on the scope and priority areas of the review. Consultations will continue with broader engagement of stakeholders from across the provinces starting early next spring. To maintain stability for taxpayers, the provincewide property reassessment will continue to be deferred until this review is complete.

Urgent Need for Action

While it is commendable to undertake a review of the property assessment and taxation system to ensure that it is functioning fairly and efficiently, it is disappointing that such a review was not started (and completed) years ago. It is not in the best interests of taxpayers or municipalities to continue to live with property assessment values that are based on a value from January 1, 2016, when so much has changed in the market over the past eight years.

It should be remembered that prior to 1998, the Ontario property tax system was a patchwork of different property assessment systems, ranging from municipalities using antiquated assessment values that were 20, 30, 40 or even 50 years old to municipalities using assessment values that were based on more current market values or fractions thereof.

The provincial government determined that a consistent and up-to-date property assessment system was necessary to make it “fairer” and “easier to understand.” That is why the first provincial property reassessment occurred in 1998, with the introduction of the Fair Municipal Finance Act, 1997. Since then, Ontario has made regular updates to the system, with no base-year assessment being in place for more than four years – until 2021. The release of the 2024 Budget means that Ontario will now be heading into the ninth year of a property assessment cycle. The initiation of a property assessment review is commendable but delays in implementation have underscored the urgency to reflect market changes and ensure fairness for taxpayers and municipalities.

Notwithstanding the postponement of a provincial property tax reassessment, owners of properties should ensure that their property assessments are reviewed annually, even if they have been reviewed and/or appealed since 2017. Properties that have undergone changes in physical state and condition (including highest and best use) may be eligible for assessment reductions. In addition, owners should be aware of any unexpected increases in assessment values by way of regular Property Assessment Notice or Property Assessment Change Notice issued by MPAC or appeals of their assessments launched by municipalities. In short, despite the postponement of the property tax reassessment, it is prudent to ensure that a property’s assessment is correct and equitable.

The Municipal & Land Use Planning Group at Aird & Berlis LLP will continue to monitor developments in municipal taxation. Please contact a member of the group if you have questions or require assistance.