August 31, 1998
To:Corporate Services
From:Chief Financial Officer & Treasurer
Subject:Final Billing of 1998 Property Taxes - Update
Purpose:
To provide an update with respect to the final billing of 1998 property taxes.
Funding Sources, Financial Implications and Impact Statement:
At this point the extra costs associated with additional mailers (estimated at $200,000) to
residential taxpayers for the seniors/low income disabled tax deferral application form along
with a clarification notice can be absorbed within the 1998 operating budget of the Finance
Department. The extra costs of mailing tenant listings to landlords (included above) can also
be absorbed at this point.
Recommendation:
It is recommended that this report be received for information.
Discussion:
Final tax bills for 1998 were mailed to residents between August 13th and 17th, 1998. In
preparation for the mailing, approximately 200 staff in Finance Revenue Services were
trained on the City's new property tax implementation plan. Separate training sessions were
also provided to all Council members' executive assistants, Access Toronto staff, and City
Clerks' assessment
staff. Copies of the training materials were made available to all departments with an offer
for additional training for front line staff if appropriate. No additional training sessions were
requested.
Staff across the six civic centres handled approximately 7,000 calls per day during the week
of August 17th. During the week of August 24th the number of telephone calls per day
averaged 4,600. To accommodate the high volume of calls, office hours were extended to
7:00 p.m. from August 19th to August 28th. Very few calls were actually received between
5:30 and 7:00 p.m.. The busiest tax office, 112 Elizabeth Street, received no more that 15
calls after 5:30 p.m. on any given evening shift. By August 28th the number of calls coming
into the tax offices decreased to manageable levels - approximately 4,100 calls across the six
tax offices.
The majority of taxpayer questions asked of City staff during the week of August 17th
related to the calculation of the tax bill and current account balance. For approximately four
full days, staff responded exclusively to taxpayers as to how figures on the tax bill were
calculated. By the week of August 24th the majority of questions being asked related to
general billing issues such as mailing address corrections, amounts owing for penalty and
arrears, and how to appeal 1998 assessments. While the volume of calls is still above normal
average, the additional staff assigned to answering calls is helping to reduce long waits and
busy signals. Additional staff assistance will be in place until the first instalment date of
September 8th at which time the situation will be re-evaluated.
The City also placed two ads in the major daily papers with respect to the final tax bill; one
explaining the tax bill (attached as Appendix A) which ran on Thursday, August 20th; and
one outlining the installment due dates (attached as Appendix B) which ran on Thursday,
August 27th.
The 1998 tax bill format was deficient in several key aspects that led to the significant
volume of taxpayer calls and ensuing confusion. While over one third of taxpayers did not
see any changes in their tax bill because their increase was less than $300 or their decrease
was less than $200, the balance of taxpayers were presented with a tax bill that had new
information that was not explained in a clear manner. The following highlights the
deficiencies in the 1998 tax bill:
No clear display of 1998 taxes. A total line after line 4 on the bill would have made this
clear.
No break-out of the "non-phaseable" Provincial tax shift component of the total tax rate.
While this amount was highlighted in staff reports on tax policy, it was not highlighted on
the enclosed brochures or on the tax bill in an effort to not add confusion.
Too many brochures.
No breakout of how the phase-in/capping amount for years after 1998 through the phase-in
period.
No clear comparison of 1997 taxes to 1998 taxes.
No clear calculation of the total assessment change.
At this time, staff are continuing to tabulate suggestions from taxpayers and Councillors on
how to incorporate improvements to the 1999 interim and 1999 final tax bills. Draft tax bills
will be focus tested with a cross section of taxpayers and Councillors . Staff will be
submitting the proposed 1999 interim and 1999 final tax bill formats that overcome the
noted deficiencies in the 1998 tax bill, to the next Corporate Services Committee in October.
A "Clarification Notice" has been prepared to answer the questions raised by the deficient
1998 tax bill that will be included in the seniors/low-income disabled tax deferral mailer to
all residential taxpayers . The estimated cost for the mailing of the tax deferral brochure, a
clarification notice and other mailings to commercial and industrial taxpayers are estimated
to be $200,000. At this point it is felt that this can be absorbed within the Finance
Department 1998 operating budget.
There are currently several issues which staff are working to resolve:
1)Owner-Occupied Condominiums
In previous years, tenanted condominiums were assessed at two or three time the level of
owner-occupied condominiums and included in the multi-residential property class. When a
tenanted condominium was sold, and the new owner subsequently moved in, it was the
Province's policy to reduce the assessment for that unit to the owner-occupied rate for
taxation in the following year.
The Province did not reduce the assessments of newly owner-occupied condominiums on
the 1998 Interim Assessment Tape due to the fact that, with the implementation of the new
assessment system, all condominiums would be included in the residential property class.
However, because the data on the 1998 Interim Assessment Tape formed the basis of any
residential phase-in amount, some condominium owners are having their reductions due to
the change in occupancy status being phased-in in conjunction with any tax change due to
Current Value Assessment.
This issue has been identified from taxpayer questions and we are actively seeking direction
from the Regional Assessment Office of the Provincial Ministry of Finance. Once they have
a resolution to the issue, an appropriate fix will be made and tax bills will be re-issued if
necessary. In the meantime, please forward by e-mail taxpayer's name and details to Lynne
Ashton in Finance.
2)Frozen Assessment Listing
We are current working on producing a listing of business tenants for every commercial or
industrial property in Toronto. The data on this list will be obtained from the last revised
Assessment Roll for 1997, as prepared by the Province of Ontario, and will be provided to
owners/landlords to assist them in apportioning their 1998 commercial and industrial
property taxes among their business tenants.
The report will be extracted and faxed and/or mailed to owners/landlords on request so that
they can make the appropriate passthrough calculation to their tenants of any 1998 tax
increase or decrease. It is anticipated this information will be available for
commercial/industrial property owners within the next two to three weeks.
Landlords with gross leases that have complied with the notification requirements under Bill
16 will be able to recover from their tenants the former Business Occupancy Tax and
Business Improvement Area charges. Bill 16 requires landlords to provide their gross lease
tenants with two notices. The deadline for the first notice, which must state that the landlord
intends to recover these amounts, was July 15th (30 days after the return of the assessment
roll). However, the Minister of Finance has announced that legislation would be introduced
to extend the deadline for the first notice to October 30, 1998.
3)Low-Income Seniors and Disabled - Tax Deferral
The application form for the low-income seniors and disabled tax deferral program was not
included in this tax bill mailing. Staff at the civic centers have been instructed to take the
taxpayer's names and details. Recognizing the financial implications for these taxpayers, if a
senior or low income disabled taxpayer have verbally advised us that they would qualify for
the program, and depending on the request of the individual taxpayer, we are recalculating
their instalments and advising them of the new amount subject to them completing an
application when they are available. If they are unsuccessful in their application, we will be
advising them and then requesting the difference be paid within a grace period.
Staff of the Finance, FOI and Legal Departments are preparing information brochures and
application forms for mailing within the next three to four weeks. For 1998, the deadline for
taxpayers to apply for the tax deferral program is November 30, 1998.
4)1997 Assessment Appeals
There have also been inquiries from taxpayers who received assessment reductions for 1997
but the reduction was not reflected in the 1997 Adjusted Taxes shown on their tax bill. This
problem arises from the assessment roll being frozen by the Province in November, 1997
prior to the reassessment in 1998. Again, this data formed the basis for the phase-in
calculation. However, the Assessment Review Board has continued to process appeals for
the 1997 tax year and taxpayers that received assessment reductions for 1997 in 1998 would
not have these reductions
reflected in their 1997 Adjusted Taxes. Staff at the civic centres have been instructed to take
the names and addresses and all other pertinent information from taxpayers in these
circumstances. Taxpayers are being advised that their tax bills, and resulting phase-in
amounts will be adjusted and a new tax bill issued.
5)1998 Assessment Appeal Deadline
The Minister of Finance has announced that legislation would be introduced to extend the
deadline to appeal a property's Current Value Assessment for the 1998 tax year to October
30, 1998. Until an official notification is received from the Province on this matter, staff
have advised taxpayers to meet the August 31, 1998 deadline if at all possible.
Supplementary Taxes
It is also expected that the City will be receiving its first and only Supplementary
Assessment Roll that covers "missed" accounts from 1997 and 1996. It is indeterminate at
this time what the dollar value of the roll will be. 1998 budgeted supplementary taxes are
$40,230,000. The delay in the 1998 assessment roll delivery and the proposed further appeal
extension date will impact negatively on the Ministry of Finance's Assessment Division's
ability to meet their projected supplementary tax amount which formed the basis of our
1998 budget amount. The due date for this first supplementary roll will be in 1998 with only
one instalment date, likely in early December. These are accounts that do not relate in
anyway to the 1998 new CVA system and the Council phase-in plan.
Conclusion:
Staff will continue to work on outstanding issues and will issue updated briefing notes to
Council members and staff as required. A tax bill clarification notice will be mailed out to
all residents in September, in conjunction with the assessment-related tax deferral
application for low income seniors and low income disabled persons. A report regarding
draft tax bill designs for the 1999 interim and the 1999 final tax bill will be submitted to
Corporate Services Committee at its next meeting.
Contact Name and Telephone Number:
Giuliana Carbone, Director of Revenue Services392-8065
Sharon Kinasz, Manager Centralized Client Services392-6798
W. A. Liczyk
Chief Financial Officer & Treasurer
