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Business tax reductions

CITY Council has approved a long-term plan to spur business competitiveness by reducing property tax rates within the business tax classes.

In 2008, Toronto began providing accelerated tax relief for smaller businesses by introducing graduated tax rates within the commercial classes. Graduated tax rates will see smaller business properties move to the City’s target rate by 2015, with all commercial properties expected to reach the target rate by 2020.

Also in 2008, City Council adopted the “Residual Commercial” property tax class, which includes smaller businesses and all other commercial property types that are not specifically included in the “Commercial” property tax class (shopping centres, large office buildings, parking lots, vacant land and large sports facilities). Properties in the “Residual Commercial” property class will see a lower tax rate applied to the first million dollars of assessed value. The balance of the assessed value will be taxed at the “Commercial” property tax rate. Properties in the “Residual Commercial” tax class saw a 1.29 per cent tax rate decrease for 2008. Properties in the “Industrial” tax class saw a 1.01 per cent tax rate decrease for 2008.

These measures have contributed to a boom in commercial development in Toronto, which saw a total of $3.1 billion in building permits issued in the first seven months of 2008. Planned developments include

• 3.6 million square feet of Class A office space in four major new office buildings in the downtown area in 2009 and 2010
• $2.4 billion in investment in large scale hotel developments
• $1.4 billion in entertainment/cultural projects, and
• over $1 billion in major medical and industrial complexes.

Toronto businesses have also seen steady increases in commercial rents in 2007 and 2008, combined with a decrease in office and industrial vacancy rates.

Toronto’s final 2008 tax bills were mailed to all property owners in May.

Visit toronto.ca/taxes/property_tax/rate_reduction

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