Veterans' Clubhouses and Legion Halls -
Property Tax Rebates Under Section 442.1
of the Municipal Act
The Policy and Finance Committee recommends the adoption of the Recommendations of the Assessment and Tax
Policy Task Force embodied in the following communication (September 24, 1999) from the City Clerk; and
further, that there be no other commercial use other than the renting of halls or else taxes will be applied:
Recommendations:
The Assessment and Tax Policy Task Force recommends that:
(1)the City discontinue the current tax relief program of providing exemptions and grants for the City share of taxes for
Veterans' Clubhouses and Legion Halls;
(2)for 1999, 2000 and 2001, City Council adopt a rebate program under Section 442.1 of the Municipal Act to provide for
the rebate of property taxes representing 100 percent of the property taxes payable on the clubhouse portion of the property
for the Veterans' Clubhouses and Legion Halls listed in Appendix 1;
(3)the amount of $140,050.00 allocated in the 1999 Operating Budget under Non-Program Expenditures - Consolidated
Corporate Grants - Legions be transferred to Non-Program Expenditures - Tax Deficiencies;
(4)each veterans' organization receiving a property tax rebate provide annually to the City by September 1 each year,
organizational, operational and financial information in a form satisfactory to the Chief Financial Officer and Treasurer;
(5)the tax rebate program for Veterans' Clubhouses and Legion Halls be reviewed by June, 2001, with such review to
include examination of the membership and financial status of such organizations to determine the appropriateness of
continuing the tax rebate program;
(6)authority be granted for the introduction of the necessary bill in Council; and
(7)the appropriate civic officials be authorized to carry out the required actions to give effect to the foregoing.
Background:
The Assessment and Tax Policy Task Force, on September 22, 1999, had before it a report (June 21, 1999) from the Chief
Financial Officer and Treasurer respecting Veterans' Clubhouses and Legion Halls - Property Tax Rebates Under Section
442.1 of the Municipal Act, and recommending that:
"(1)the City discontinue the current tax relief program of providing exemptions and grants for the City share of taxes for
Veterans' Clubhouses and Legion Halls;
(2)for 1999, 2000 and 2001, City Council adopt a rebate program under Section 442.1 of the Municipal Act to provide for
the rebate of property taxes representing 100 percent of the property taxes payable on the clubhouse portion of the property
for the Veterans' Clubhouses and Legion Halls listed in Appendix 1;
(3)the amount of $140,050.00 allocated in the 1999 Operating Budget under Non-Program Expenditures - Consolidated
Corporate Grants - Legions be transferred to Non-Program Expenditures - Tax Deficiencies;
(4)each veterans' organization receiving a property tax rebate provide annually to the City by September 1 each year,
organizational, operational and financial information in a form satisfactory to the Chief Financial Officer and Treasurer;
(5)that the tax rebate program for Veterans' Clubhouses and Legion Halls be reviewed in 2001, with such review to
include examination of the membership and financial status of such organizations to determine the appropriateness of
continuing the tax rebate program;
(6)that authority be granted for the introduction of the necessary bill in Council; and
(7)that the appropriate civic officials be authorized to carry out the required actions to give effect to the foregoing."
The Task Force also had before it a Status Report (September 8, 1999) from the Chief Financial Officer and Treasurer
respecting Veterans' Clubhouses and Legions Tax Rebate - Meeting held on August 30, 1999, and recommending that this
report be received for information.
The Task Force's recommendations are noted above.
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(Report dated June 21, 1999, addressed to the
Assessment and Tax Policy Task Force from the
Chief Financial Officer and Treasurer)
Purpose:
This report provides information and justification for the implementation of a property tax rebate program for Veterans'
Clubhouses and Legion Halls for 1999, 2000 and 2001, which will replace the current method of providing tax relief to
these organizations through exemptions and grants for the City share of taxes. This report also provides an update
regarding the response of the Province to Council's request that these organizations be exempted from the education
portion of taxes, as well as reporting on the disposition of grants for 1999 and future years.
Financial Implications:
A property tax rebate program for Veterans' Clubhouses and Legion Halls will result in tax relief totalling $430,205.00
being provided in 1999 for the City's share of taxes. Funds have been provided for this expenditure in the 1999 Operating
Budget. Similar operating budget allocations will be required for the 2000 and 2001 tax years.
Under the proposed tax rebate program, these organizations will also receive a rebate for the education share of taxes. The
total amount of education taxes to be rebated in 1999 is $283,501.00, which is recoverable from the Province under the
provisions of Section 442.1 of the Municipal Act.
Recommendations:
It is recommended that:
(1)the City discontinue the current tax relief program of providing exemptions and grants for the City share of taxes for
Veterans' Clubhouses and Legion Halls;
(2)for 1999, 2000 and 2001, City Council adopt a rebate program under Section 442.1 of the Municipal Act to provide for
the rebate of property taxes representing 100 percent of the property taxes payable on the clubhouse portion of the property
for the Veterans' Clubhouses and Legion Halls listed in Appendix 1;
(3)the amount of $140,050.00 allocated in the 1999 Operating Budget under Non-Program Expenditures - Consolidated
Corporate Grants - Legions be transferred to Non-Program Expenditures - Tax Deficiencies;
(4)each veterans' organization receiving a property tax rebate provide annually to the City by September 1 each year,
organizational, operational and financial information in a form satisfactory to the Chief Financial Officer and Treasurer;
(5)that the tax rebate program for Veterans' Clubhouses and Legion Halls be reviewed in 2001, with such review to
include examination of the membership and financial status of such organizations to determine the appropriateness of
continuing the tax rebate program;
(6)that authority be granted for the introduction of the necessary bill in Council; and
(7)that the appropriate civic officials be authorized to carry out the required actions to give effect to the foregoing.
Background:
At its meeting of October 1, 1998, City Council adopted Clause 1 of Report No. 19 of the Strategic Policies and Priorities
Committee regarding Veteran's Clubhouses and Legion Halls. The report recommended, among other things, that tax relief
be provided for 1998 based on the status quo to those clubhouses and legion halls that were provided tax relief prior to
amalgamation. For 1999, 2000 and 2001, tax relief was to be extended to all veterans' clubhouses and legion halls across
the new City, through exemptions and grants for the City share of taxes. The properties affected are set out in Appendix 1.
The total amount of tax relief that would have been provided in 1999 through exemptions and grants for the City share of
taxes would have been $430,205.00.
At that time, Council also requested that the Province of Ontario exempt these organizations from the education portion of
taxes. The Province has now responded to Council's request. In his letter dated April 13, 1999 (attached) to Councillor
Nunziata, the Minister of Finance expressed the support of the Province in assisting veterans' organizations, and called
attention to section 442.1 of the Municipal Act, which allows municipalities to provide property tax rebates to charities and
similar organizations for up to 100 per cent of the organization's property taxes. The Minister also stated that if the City
did choose to proceed with a rebate program in accordance with section 442.1, "The Province (would) share the cost of the
rebate program with respect to the education portion of the property taxes."
Comments:
Section 442.1 of the Municipal Act provides for tax rebates for charities and similar organizations. For municipalities that
did not adopt the 2.5 percent cap in 1998 under the provisions of Bill 16, section 442.1(3) requires municipalities to adopt
a rebate program that provides a minimum rebate of 40 percent of the taxes payable by an eligible charity. The section also
sets out other terms and conditions, such as the timing of payment of rebates, which must be met within the mandatory
program established by the municipality.
In 1998, City Council opted for the 2.5 percent cap and therefore, was not required to have a mandatory rebate program. As
a result, at its meeting on July 21 and 23, 1998, City Council adopted the recommendations that no property tax rebate
program be instituted for charitable and similar organizations for the duration of the capping period (i.e, 1998 to 2000).
Subsequent to, and as a result of Council's decision not to institute a property tax rebate program, the recommended tax
relief mechanism to provide property tax relief for veterans' clubhouses and legion halls was to provide exemptions and
grants for the City share of taxes. As noted above, at that time Council also requested that the Province of Ontario exempt
these organizations from the education portion of taxes and once the response from the Province was received, that the
Chief Financial Officer and Treasurer report to the Municipal Grants Committee on the disposition of grants for 1999 and
future years.
Approval by Council of a tax rebate program will provide full relief for 100 percent of the property taxes payable by these
organizations in a more effective way than the exemption route. In addition, a tax rebate program would not result in the
City incurring more costs to provide tax relief for these organizations than has already been committed, as the Province
will share in the cost of providing rebates for the education share of taxes.
Disposition of Grants - 1999 and Future Years:
The 1999 Operating Budget includes $140,050.00 for grants for Veterans' Clubhouses and Legion Halls. However, if
Council chooses to adopt a tax rebate program, the rebates would be treated in a similar manner as other tax deficiencies,
with the cost shared with the Province for education purposes. The total amount of rebates that would be required to be
funded by the City in 1999 is $430,205.00. Funds are available for this expenditure under Non-Program Expenditures - Tax
Deficiencies.
In the October 1998 report, the allocation of grants for 1999 was deemed to be required should the City decide to offset a
portion of education taxes, if the Province did not agree to provide an exemption from taxes for education purposes for
these organizations. However, as noted above, adoption of a rebate program would result in the rebate of education taxes
being funded by the Province. Therefore, the 1999 grant allocation in the City's 1999 Operating Budget would no longer be
required for this purpose and should be transferred to tax deficiencies.
Terms and Conditions - Proposed Rebate Program:
The City Solicitor advises that subsection (4) of Section 442.1 provides for a completely separate voluntary rebate
program, the conditions of which can be established by the municipality. Such a program is not bound by the conditions
required of the mandatory program under subsection (3). Consequently, the City can establish a rebate program for legions
and veterans clubhouses which is not bound by the strict time deadlines established for the mandatory rebate program. If
such a program is adopted, the cost of the rebates are shared by the municipality and the school boards in the same
proportion as the municipality and school boards share in the revenue from the taxes on the property (subsection (7)).
However, the City is required to give the recipient of the rebate a written statement of the proportion of the costs of the
rebate that is shared by the school boards (subsection (8)).
It is recommended that the City establish a property tax rebate program to provide for the rebate of 100 percent of the
property taxes payable by the Veterans' Clubhouses and Legion Halls, subject to the following terms and conditions:
(1)property tax rebates under this program are limited to those properties occupied and used as a memorial home,
clubhouse or athletic grounds by persons who served in the armed forces of Her Majesty or Her Majesty's allies in any war
as set out in Appendix 1;
(2)all clubhouses and legion halls receiving a property tax rebate must provide annually to the Chief Financial Officer
and Treasurer a copy of their audited financial statements, as well as other information regarding their organization
(including number of members) and operations (including community activities). This information must be received by
September 1st each year;
(3)property tax rebates will only be provided for the portion of the property actually used as a clubhouse;
(4)Veterans' clubhouses and legion halls that occupy their premises pursuant to a lease will be required to provide a copy
of their lease agreement and/or a statement from their landlord confirming the amount of property taxes payable by them
through the terms of their lease agreement. Property tax rebates for leased premises will be paid to the organization subject
to receipt of this information. Rebates for leased premises will be paid to the veterans' clubhouses and legion halls on the
first due date following the issuing of the final tax bill for the year;
(5)property taxes for owned premises will be rebated through the direct adjustment of taxes on the property tax account;
(6)the Finance Department will provide each organization an annual statement of the property taxes rebated for the year,
including the amount of taxes rebated for school purposes; and
(7)tax rebates apply to current taxes only and not tax arrears. Any clubhouse or legion hall with outstanding taxes from
1998 or prior years must enter into payment arrangements with the Finance Department, Revenue Services Division, with a
view to bringing taxes current as quickly as possible.
The first three terms (noted above) were included as conditions for exemption from property tax in the original report dated
September 22, 1999 (SPP Report No. 19, Clause 1, October 1, 1998). The balance are included to implement the
recommended rebate program and have been developed in consultation with the City Solicitor.
Tax Rebate Program - Charities and Similar Organizations:
It should be noted that Council has not yet instituted a rebate program for charities and similar other organizations.
However, development of a comprehensive policy for tax rebates for these organization is currently underway, and it is
expected that a report recommending such a program will be before the Task Force by September, 1999.
Conclusion:
In 1998, City Council approved the provision of tax relief for Veterans' Clubhouses and Legion Halls for the years 1999,
2000 and 2001. The tax relief would be provided through exemptions and grants for the City share of taxes. At that time,
Council also requested the Province of Ontario to exempt these organizations from education taxes.
It is recommended that, in lieu of the current tax relief program for Veterans' Clubhouses and Legion Halls, the City
establish a property tax rebate program under Section 442.1 of the Municipal Act, which would provide for the rebate of
100 percent of the property taxes payable by the Veterans' Clubhouses and Legion Halls for 1999, 2000 and 2001. The tax
rebates would be subject to the terms and conditions set out in this report. The tax rebate program would be reviewed in
2001 to determine whether it should be continued.
The Minister of Finance has indicated, in writing, that if the City adopts a property tax rebate program under Section 442.1
of the Municipal Act, the Province will share in the cost of the rebates for the education portion of taxes. Tax relief
provided under a rebate program would effective in providing full relief for 100 percent of the property taxes payable by
these organizations. In addition, a tax rebate program would not result increase the City's cost to provide this tax relief for
these organizations as has already been committed, as the Province will share in the cost of providing rebates for the
education share of taxes.
Development of a comprehensive policy for tax rebates for charities and other similar organizations is currently underway,
and a report recommending such a program will be before the Task Force by September, 1999.
Contact Name:
Lynne Ashton, 397-4203
Paul Wealleans, 397-4208
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(Letter dated April 13, 1999 from the Honourable Ernie Eves,
Minister of Finance to Councillor Nunziata.)
Thank you for your letters supporting an exemption from the education portion of property taxes for the Royal Canadian
Legion branches.
I understand and appreciate the level of service and benefits Royal Canadian Legions provide to communities throughout
the province. As you may be aware, under section 442.1 of the Municipal Act, municipalities have the power to provide
property tax rebates to charities and similar organizations. Municipalities can determine the eligibility criteria for similar
organizations and can rebate up to 100 per cent of an organization's property taxes if they so choose. The Province will
share the cost of the rebate program with respect to the education portion of the property taxes.
I appreciate your taking the time to bring this matter to my personal attention.
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(Report dated September 8, 1999, addressed to the
Assessment and Tax Policy Task Force from the
Chief Financial Officer and Treasurer)
Purpose:
To provide information to the Task Force on the meeting held on August 30, 1999 between Councillor Adams, Councillor
Nunziata, City Finance staff and representatives from various veterans' clubhouses and legions.
Recommendation:
It is recommended that:
This report be received for information.
Comments:
At its meeting of June 28, 1999, the Assessment and Tax Policy Task Force deferred consideration of a report dated June
21, 1999 from the Chief Financial Officer and Treasurer regarding tax rebates until its meeting in September 1999 and
requested "its Chair and Councillor Nunziata, in consultation with appropriate officials, to meet with representatives of
veterans' clubhouses and legions to address concerns they may have." On August 30, 1999 a meeting was held at City Hall
to discuss this issue and those attending included: Councillor Adams, Councillor Nunziata, three members of Finance
Department staff and sixteen representatives of various veterans' clubhouses and legions.
The recommendations contained in the June 21, 1999 report were discussed. The main recommendation is that, given the
Provincial Government's refusal to exempt the clubhouses and legions from the education share of taxes (over which it has
control), the City implement a tax rebate program under Section 447.1 of the Municipal Act for total taxes (city and
education portion). The Provincial Government would then reimburse the City for the education portion. The result will be
a complete rebate of property tax for the veterans' clubhouses and legion halls for the tax years 1999, 2000 and 2001.
At the August 30th meeting representatives from the veterans clubhouse expressed a concern regarding the recommendation
that "the tax rebate program for Veterans' Clubhouses and Legion Halls be reviewed in 2001 ...". Staff noted that the time
frame was recommended to conform with the City's overall review of property tax policies which will coincide with the
next Provincial reassessment in 2001. The City has established a Business Reference Group to review tax policies for the
next reassessment and tax rebates will also be included in the analysis.
Most other issues discussed at the meeting were administrative in nature, such as procedures to apply for the rebate for
those that lease properties, development of final procedures for the administration of the rebate program and
communication of those to the clubhouses and legions, ensuring a complete and accurate mailing list is maintained, and the
types of financial information to be provided to the Chief Financial Officer and Treasurer for annual review for a rebate.
Staff addressed these issues at the meeting.
Conclusion:
The consensus from the representatives of veterans' clubhouses and legions at the meeting on August 30, 1999 was support
for the tax rebate program and the recommendations contained in the June 21, 1999 report.
Contact Name:
Paul Wealleans, 397-4208
Giuliana Carbone 392-8065.
