To review the appropriateness of continuing the Seniors Tax Credit Program and the Tax Deferral Programs provided by the new City of Toronto=s former local municipalities, given that assessment reform mandates that a new tax policy be developed and adopted by Council. The new policy, to be considered in May of this year, and must include reference to financial relief for low income seniors and low income persons with disabilities.

The former City of Toronto provided a $100.00 tax credit against the local portion of realty taxes of eligible seniors. In 1997, there were 4,138 eligible applicants, representing $413,800.00 in local taxes forgone and borne by all taxpayers in the City. Extending this program to an estimated 16,000 to 18,000 low income senior homeowners in the new City of Toronto would result in an estimated $1.2 million to $1.4 million in additional budget pressure for 1998.

It is recommended that:

The former City of Toronto was the only former local municipality with a program to provide a property tax credit in the amount of $100.00 against the City portion of realty taxes of eligible seniors. This program was initiated in 1974 through enactment of the Municipal Elderly Resident=s Assistance Act, and subsequent City of Toronto by-law. In order to qualify, seniors must be 65 years of age or over, have owned and occupied a home in the City for the past five years, and must receive a monthly Guaranteed Income Supplement under the Old Age Security Act. In 1997, there were 4,138 eligible applicants in the City, for which a total of $413,800.00 was refunded as a credit against the final tax bill.

The former Cities of Etobicoke and York provided an alternate form of financial relief for low income seniors. Etobicoke offered a $600.00 annual tax deferral program, while York offered a $150.00 annual tax deferral program. The eligibility criteria was identical to that of the Toronto program, with the exception that the residency requirement was only three years. However, this program differed in that the amount deferred was treated as a lien against the property, to be repaid without interest when the property changed title. As of 1997, there were 159 liens in Etobicoke, with a total amount receivable of $285,800.00, and 43 liens registered in York, with the receivable being $25,800.00.

In addition to these programs, the Province of Ontario under its Ontario Pensioners Property Tax Assistance Act provides eligible seniors with a grant of up to $600.00 annually towards their property taxes, however, this grant would be offset by any municipal credit. Thus, eligible seniors would still receive up to the maximum $600.00 grant entitlement even if the Tax Credit program were cancelled.

In each case, the application form for the Tax Credit or Tax Deferral program must be submitted each year by the 31st of December in order to obtain the relief. At this time, applications have already been received for the 1998 taxation year, however, none have been processed as this is usually done as part of the final tax billing.

Based on Statistics Canada=s 1995 Income data, it is estimated that, in the new City of Toronto there are approximately 195,000 owner-occupant households where the owner is 65 years of age or older. Of these, it estimated that there may be approximately 16,000 to 18,000 potentially eligible households who meet the criteria of a household income from under $15,000-$25,000 per year, based on extrapolation of historic experience. While the definition of low income may be the subject of debate, and given the foregoing, it is estimated that to extend the $100.00 Tax Credit Program to eligible seniors may necessitate funding in the range of $1.6 million to $1.8 million from the new City of Toronto.

With respect to tax relief for low income seniors, the Fair Municipal Finance Act mandates that the council of a municipality must pass a by-law providing for the Adeferrals or cancellation of, or other relief in respect of, all or part of assessment-related tax increases on property in the residential/farm property class for owners who are or whose spouses are@ low income seniors as defined in the by-law, or low-income persons with disabilities as defined in the by-law. The deferral or cancellation of the assessment related increases must be effected beginning in the 1998 taxation year, with the deferral or cancellation appearing in the final tax bill.

As the financial impact of property assessment and tax reform for seniors is not known at this time, it may be prudent to cancel the aforementioned programs, since a new tax policy as part of the tax implementation plan will be considered by Council in May of this year.

The former City of Toronto was the only municipality offering a $100.00 tax credit refund to low income seniors. In 1997, approximately 4,138 eligible applicants received refunds totalling $413,800.00 in funding by the City. It is estimated that, to extend this program to the 16,000 to 18,000 potentially eligible seniors in the new City of Toronto would require new funding in the range of $1.6 million to $1.8 million. The cities of Etobicoke and York offered an interest free tax deferral program, however, the amount deferred was taken as a lien against the property.

Given the impending changes to the property assessment and taxation system, it is recommended that the existing Tax Credit and Tax Deferral programs be cancelled. A new policy, which will include consideration for the deferral or cancellation of assessment related tax increases for low income seniors and persons with disabilities, and any other mechanism for financial relief as deemed appropriate for such a policy, must be considered and adopted by Council as part of its Current Value Assessment responsibilities.

E. DeSousa, Tax Revenue, telephone: 394-8324; fax: 394-5555

A. Gupta, Budget and Financial Planning: 392-8071; fax 392-3649

W. Wong, Tax Revenue: 394-9148; fax 392-3649

The Assessment and Tax Policy Task Force, on February 19, 1998, recommended to the Strategic Policies and Priorities Committee the adoption of the report (February 10, 1998) from the Chief Financial Officer and Treasurer respecting Seniors Property Tax Credit.

The Assessment and Tax Policy Task Force reports having requested the Chief Financial Officer and Treasurer to provide the following to the Task Force:

The Assessment and Tax Policy Task Force had before it a report (February 10, 1998) from the Chief Financial Officer and Treasurer respecting a Seniors Property Tax Credit.

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At the meeting of the Strategic Policies and Priorities Committee on February 24, 1998, Councillor Pantalone, Ward 20 - Trinity-Niagara, declared his interest in the foregoing matter in that his father has been a recipient of the $100.00 Seniors Property Tax Credit.