As part of the 2020 provincial budget, municipalities were given the ability to create a small business tax class to provide a lower property tax rate to small businesses in the commercial tax class. City Council, earlier this year, directed City staff to develop the framework for this tax class, which will provide tax relief to Toronto’s small businesses.

Providing tax relief to small businesses is key to a lively, diverse and revitalized city, which is more important than ever given the toll the COVID-19 pandemic and related closures had on businesses this past year. Small businesses have been particularly hard hit, and the creation of a small business tax class provides much-needed relief to our main street shops and businesses post-pandemic.

With the development of a small business property tax class, the following is addressed:

  • the preservation and rebuilding of Toronto’s Main Streets
  • broad tax relief for small businesses
  • the need to reduce property taxes for small businesses who have endured increases in property assessments over the last number of years.

 Existing Tax Relief

  • Toronto provides a lower tax rate for the first $1 million of Current Value Assessment (CVA), excluding certain business types (parking lots, shopping centres, office towers)
  • Capping policies currently provide relief for all businesses. Increases are capped at 10 per cent.

The City is hosting public consultations to gather feedback on this proposed new tax class.

City staff will be consulting on:

  • how a small business will be defined
  • how many businesses may be eligible, and what is the total amount to be funded to provide a tax rate reduction
  • how will the tax rate reduction be funded
  • how will the program be administered

Consultation Details

The City will be hosting the following pubic virtual consultations:

  • August 10 from 10 a.m. to 12 p.m.
  • August 11 from 1 to 3 p.m.
  • August 18 from 7 to 9 p.m.

If you would like to submit your question in advance of the session, please email RSPolicy@toronto.ca.

The presentation from these consultations is available.

Survey

Thank you to those residents of Toronto that participated in the Small Business Tax Class survey. The survey closed on August 20 at 6 p.m.

Attendees’ responses to the multiple-choice poll conducted during the public consultation.

Q1: I am attending today’s session because I am:

August 10 August 11 August 18
An owner of a small business in Toronto 11 % 15 % 25 %
An owner of a large business in Toronto 0 % 0 % 0%
A commercial tenant of a business in Toronto 0 % 0 % 0%
A member of a business association or business group 58 % 54 % 25%
A member of a non-profit group or association 5 % 15 % 25%
A resident of Toronto (not a business owner or business tenant) 11 % 8 % 25%
Other/None of the above 16 % 8 % 0%

 

Q2: Would you support a small business tax subclass targeting small business properties located within the City’s Downtown, Growth Centres or Avenues, as defined by the Official Plan?

August 10 August 11 August 18
Strongly support 37 % 36 % 33%
Support 53 % 36 % 67%
Neutral 5 % 7 % 0%
Oppose 0 % 14 % 0%
Strongly oppose 5 % 7 % 0%
Unsure 0 % 0 % 0%

 

Q3: Do you think a small business tax subclass should be based on:

August 10 August 11 August 18
A) Geographic location 0 % 7 % 0%
B) Lot size and/or gross floor area 5 % 7 % 0%
C) Current Value Assessment (CVA) 0 % 7 % 33%
Combination of A and B? 29 % 20 % 0%
Combination of A and C? 0 % 0 % 0%
Combination of B and C? 10 % 20 % 0%
Combination of all above? 57 % 40 % 67%

 

Q4: Would you support a small business tax subclass targeting small business properties based on lot size?

August 10 August 11 August 18
Strongly support 5 % 13 % 33%
Support 45 % 33 % 67%
Neutral 18 % 20 % 0%
Oppose 5 % 7 % 0%
Strongly oppose 5 % 13 % 0%
Unsure 23 % 13 % 0%

 

Q5: Should the maximum lot size be based on:

August 10 August 11 August 18
Under 10,000 square feet? 36 % 53 % 50%
Under 15,000 square feet? 14 % 7 % 0%
Under 20,000 square feet? 23 % 20 % 50%
Unsure 27 % 20 % 0%

 

Q6: Would you support a small business tax subclass targeting small business properties based on Current Value Assessment (CVA)?

August 10 August 11 August 18
Strongly support 9 % 23 % 0%
Support 32 % 46 % 100%
Neutral 9 % 0 % 0%
Oppose 23 % 8 % 0%
Strongly oppose 18 % 15 % 0%
Unsure 9 % 8 % 0%

 

Q7: What CVA threshold should be considered?

August 10 August 11 August 18
Up to $1 million across the City 0 % 7 % 0%
Up to $3 million across the City 25 % 36 % 0%
Up to $1 million outside the downtown core and up to $3 million downtown 25 % 36 % 100%
Up to $1 million outside the downtown core and up to $5 million downtown 33 % 21 % 0%
Unsure 17 % 0 % 0%

 

Q8: How important do you feel it is to reduce the tax rate for small businesses?

August 10 August 11 August 18
Critically important 81 % 56 % 75%
Somewhat important 10 % 39 % 0%
Neutral 10 % 0 % 25%
Not important 0 % 6 % 0%
Unsure 0 % 0 % 0%

 

Q9: Would you still support implementing a small business tax class if the costs of tax relief is to be funded solely from within the commercial class?

August 10 August 11 August 18
Yes 35 % 37 % 50%
No 35 % 47 % 25%
Unsure 30 % 16  % 25%

 

Q10: If funded within the commercial class, what would be the maximum tax rate increase you would agree to support?

August 10 August 11 August 18
1 per cent increase 29 % 43 % 50%
3 per cent increase 19 % 5 % 50%
5 per cent increase 10 % 14 % 0%
Up to 10 per cent increase 14 % 19 % 0%
Unsure 29 % 19 % 0%

Regulations enacted on May 7, 2021

  • Reg. 331/21 (amending O. Reg. 282/98 under the Assessment Act) establishes the optional small business property subclass
  • Reg. 332/21 (amending O. Reg. 73/03 under the Municipal Act) sets the maximum municipal reduction factor at 35 per cent.