Property owners whose property has been included in the small business subclass do not need to take any further action – the new classification and reduction in tax rates will be reflected in your property’s 2022 Final Tax Bill that will be mailed in May.

 

In November of 2021, Toronto City Council adopted the report: Implementing a Small Business Property Tax Subclass, which provides a 15 per cent reduction in the municipal tax rate for eligible small business properties starting in 2022. The Province of Ontario provided a matching 15 per cent reduction in the provincial education portion of property taxes for eligible properties.

Amended Property Assessment Notices

In January 2022 the Municipal Property Assessment Corporation (MPAC) mailed Amended Property Assessment Notices to property owners whose commercial property meets the eligibility requirements to be included in the new small business subclass.

If you recently received an Amended Property Assessment Notice from the Municipal Property Assessment Corporation (MPAC) that indicates a change in the tax class of your property to “Commercial Small Business”, your property has been deemed to meet the eligibility criteria to be included in the small business property tax subclass for 2022.

To be eligible for inclusion in the Small Business subclass, a property must meet either of the criteria set out below, depending on the location of the property.

Property Location Criteria to qualify for the subclass
Anywhere in the City
  1. Property must be classified within the Commercial or New Commercial Property Tax Class (CT or XT classification), with certain property types excluded – refer to note 1 below.
  2. Current Value Assessment (for 2022 taxation year) must be less than or equal to $1 million.
Properties located within Downtown and Central Waterfront, Growth Centres, and/or Avenues (refer to note 2 below)
  1. Property must be classified within the Commercial or New Commercial Property Tax Class (CT or XT classification), with certain property types excluded – refer to note 1 below.
  2. Current Value Assessment (for 2022 taxation year) must be less than or equal to $7 million;
  3. Lot size must be 7,500 square feet or less;
    or
  4. Gross Floor Area (GFA) of 2,500 square feet or less (applies only to commercial condominiums).

 

Note 1:  The following property types are not eligible to be included in the Small Business subclass: Properties classified within the office building, shopping centre, parking lot and vacant land classes, land already classified within the Creative Co-location Facility subclass or Vacant Land subclass, and land for which a demolition permit has been issued.

Note 2:  To be eligible, properties must be located within the geographic areas identified as Downtown and Central Waterfront, Avenues or Centres on the map titled: Designated Areas for the City of Toronto Small Business Subclass, available at: https://www.toronto.ca/legdocs/municode/1184_767.pdf (Appendix 1).

Tax Rate Reduction

For eligible properties within the new small business subclass.

City Council has adopted that the tax rate for the small business subclass be set at a 15 per cent reduction in the commercial property class tax rate. This means approximately 29,000 commercial properties in the City will be eligible for this tax relief.

The remaining properties in the commercial tax class will see a property tax rate increase of 0.99 per cent in the municipal portion of property taxes to fund the tax relief.

Business Education Tax Rate

The Government of Ontario has enacted a matching 15 per cent reduction in the business education tax rate for eligible small business properties.

Residual and Graduated Commercial Tax Rates

Starting in 2022, graduated tax rates and the Residual Commercial tax class designation will be discontinued, and a single tax rate will apply to the commercial property tax class, with a 15 per cent reduction in the rate to apply to eligible small business properties.

On April 4, 2022, a list of eligible properties included in the Small Business subclass will be made available through the City’s Open Data portal.

Business property owners do not need to apply for the small business subclass tax relief. However, properties that may meet the eligibility requirements for the new small business subclass, but have not received an Amended Property Assessment Notice from the Municipal Property Assessment Corporation (MPAC) advising that the tax classification of the property has been changed to “Commercial Small Business”, or are not included on the list of eligible properties, may submit a written request for reconsideration.

Right to Dispute

Property owners who believe they have an eligible property that has not been included in the Small Business subclass have the right to file a Request for Reconsideration and/or an Appeal. Tenants cannot dispute.

Request for Reconsideration (RfR)

On April 4, 2022, a list of eligible small business subclass properties will be made available through the City’s Open Data portal. Property owners have 90 days (July 4, 2022) to submit a request for reconsideration.

Required Information

  • Property and ownership information including assessment roll number, street number and street address and owners name(s).
  • Contact information (name, business email, phone number), if agent is acting on your behalf – provide authorization.
  • The reason for the dispute and all supporting documentation.

Request for Reconsideration application – coming soon.

Applicants applying by email will receive confirmation email that your RfR was received. Requests will be reviewed and you will be contacted within 90 days from the date the request was made.

Submit request to: smallbusinessclassRfR@toronto.ca.
Tips on emailing.

The Program Administrator will determine requests for reconsideration regarding inclusion and provide a letter of determination, in accordance with Article 12 of Chapter 767, Taxation, Property Tax, of the City of Toronto Municipal Code and Ontario Regulation 282/98.

Appeal Process

Once a determination is made through the RfR process, if the property owner is not in agreement with the decision, a written request to appeal may be submitted to the Controller, City of Toronto, within 90 days of the issuance of the determination.

The City of Toronto Controller (role of Appellate Authority as appointed by City Council) will determine appeals related to inclusion.

Right to Audit

Audits may be conducted to determine whether a property is eligible to be included in the Small Business subclass. The City will annually assess designated properties that meet the criteria for inclusion. Properties that experience changes during the year may become ineligible. This may occur due to changes in assessment value, usage, tax classification or other changes affecting eligibility.

Regulations were enacted on May 7, 2021, and January 18, 2022

  • Reg. 331/21 (amending O. Reg. 282/98 under the Assessment Act) establishes the optional small business property subclass.
  • Reg. 333/21 (amending O. Reg. 121/07 under the City of Toronto Act, 2006) establishes sets the maximum municipal reduction factor at 35 per cent.
  • Reg. 11/22 (amending O. Reg. 400/98 under the Education Act) establishes the education tax rates for 2022 and prescribes a 15 per cent education tax rate reduction for properties in the Small Business subclass for Toronto.