November 24, 1999
To: Administration Committee
From: Wanda A. Liczyk
Chief Financial Officer & Treasurer
Subject: Write-Off of Uncollectible Business Taxes from the Collectors Roll
Purpose:
To seek authority to strike off from the Tax Collector's Roll certain taxes deemed uncollectable by the Treasurer.
Financial Implications:
The amount of business taxes that require removal from the Tax Collector's role is $13,674,070.89 plus $69,920.30
attributable to business improvement areas (BIA). The comparable 1998 tax write-off was $19,212,684.20. Approximately
$4,215,800 of this amount is the City's share with an additional approximately $4,210,000 in lost interest revenue. The
balance of approximately $5,250,000 is the School Board's share and will be recovered.
The BIA total amount of $69,920.30 is for each of the former cities of Toronto, Scarborough, York and Etobicoke. This is
offset by an allowance amount set aside for this purpose as part of the BIA levy and does not have a financial impact to the
city. A breakdown of the recommended strike-offs is in Schedule "A" attached.
This recommended tax write-off can be accommodated in the 1999 budget for tax deficiencies.
Recommendations:
It is recommended that:
(1) uncollectible business taxes of $13,674,070.89 be striken from the Tax Collector's Roll under the provisions of Section
441 of the Municipal Act, and
(2) the amount attributable to uncollectible taxes from Business Improvement Areas (BIA) in the amount of $69,920.30
be written off as a receivable under Section 441.
Background:
Prior to the introduction of the Current Value Assessment (CVA) system in 1998, municipalities levied for both realty and
business occupancy taxes. Effective January 1, 1998 provincial legislation eliminated Business Occupancy Tax. BOT was
the source of a large portion of a municipality's tax arrears, and municipalities and businesses alike asked for its
elimination.
Business occupancy taxes (BOT) and other charges levied as taxes, such as business improvement areas (BIAs), can be
struck from the Tax Collector's Roll under the provisions of Section 441 of the Municipal Act, R.S.O. 1990. The Section
441 process differs from other tax related adjustments because only Council can approve the write-offs being removed
from the Roll. The process does not include cancellation of taxes due to assessment appeals (i.e. the section 40 process).
Section 441 of the Municipal Act, states "Where the Treasurer ascertains that certain receivables are uncollectable, the
Treasurer shall recommend to Council that such outstanding receivables be struck off the roll and the Council may direct
the Treasurer to strike such receivables off the rolls."
Discussion:
The City still has a number of receivables related to 1997 and prior year business occupancy taxes. In an attempt to recover
the business tax arrears, the Finance Department's methods of collection includes such activities as internal collectors
conducting a series of telephone calls, mailing of collection letters, and site visits. Once all internal resources have been
exhausted, and business taxes remain unpaid, the account is assigned to a bailiff, collection agency or for legal action.
Once all collection efforts are exhausted, the Treasurer recommends to Council that such outstanding taxes be struck off
the Collector's roll, in accordance with section 441 of the Municipal Act.
The tax accounts recommended in this report have gone through the collection processes identified above. In certain cases,
payment arrangements were entered into between the taxpayers and the City. Unfortunately, due to bankruptcies and
business closures, the City is unable to collect all of the total outstanding amounts. Schedule "A" attached identifies the
former municipality and the recommended write-off by year. Schedule "B" identified the taxes receivables as of October
31st, 1999. The amounts shown in brackets represent credits on the general ledger and are not reflected in any way for
council write-off. Credits are created by either an overpayment on an account or an adjustment due to an appeal decision.
These credits will be refunded to the property owner or transferred to other outstanding accounts.
Conclusion:
The list of uncollectible business taxes has been reviewed for each area district by the Tax Collector. All appropriate
collection action has been performed. The taxes are deemed to be uncollectible. It is recommended that Council cancel the
uncollectible business taxes and strike them off from the Tax Collector's Roll.
Contact Names:
Margo L. Brunning
Manager, Collections/Receivables, Payments
and Regional Customer Service
Phone: (416) 395-6789
Fax: (416) 395-6703
Email: mbrunnin@toronto.ca
Giuliana Carbone
Director, Revenue Services Division
Phone: (416) 392-8065
Fax: (416) 395-6811
Email: gcarbone@toronto.ca
W. A. Liczyk,
Chief Financial Officer & Treasurer
MLB/sr
Schedule 'A'
Breakdown of 1999 Council Business Tax Write-Offs by District Area
| City of Toronto
Recommended Tax & BIA Write-offs by District and Tax Year |
