O. Reg. 73/03: TAX MATTERS - SPECIAL TAX RATES AND LIMITS, 2003 AND LATER YEARS, Filed March 13, 2003 under TAX MATTERS - TIME LIMITS FOR 2005 UNDER SECTIONS 308, 308.1, 310, 311, 314, 329.1 AND 362 OF THE ACT
ontario regulation 73/03
made under the
municipal Act, 2001
Made: March 6, 2003
Filed: March 13, 2003
Printed in The Ontario Gazette: March 29, 2003
tax matters — Special Tax Rates and Limits, 2003 and later years
Definitions
“former municipality” means a municipality as it existed on the day before a municipal restructuring took effect under the Act or the Old Act;
“merged area” means, in respect of a restructured municipality, a part of the restructured municipality that, before the restructuring, was,
(a) all or part of a former municipality, or
(b) unorganized territory;
“previous year” means, in respect of a taxation year, the immediately preceding taxation year;
“taxation year” means a calendar year;
“uncapped taxes” means, in respect of a taxation year, the taxes for municipal and school purposes that would have been imposed for the year if Part IX of the Act had not applied.
(2) The tax rate for a taxation year for school purposes is the tax rate prescribed for that year under section 257.12 of the Education Act.
Application
2. This Regulation applies for the 2003 and subsequent taxation years.
part ii
Determination of tax rates if subsection 311 (7) or 312 (7) of the Act applies
General tax rate if s. 311 (7) or 312 (7) of the Act applies
3. (1) This section provides for the manner in which the tax rates on property in a property class are to be determined under subsections 311 (7) and 312 (7) of the Act if the conditions set out in those subsections are satisfied.
(2) The tax rate for the general levy for the taxation year for the property class shall not exceed the sum of,
(a) the maximum class rate for the year determined for the property class under section 8; and
(b) the additional rate for the property class for the year that is determined under subsection (3) if,
(i) the municipality has calculated the tax rate for the property class pursuant to a regulation made under subsection 361 (11) of the Act, and
(ii) the property class is one of the commercial classes or industrial classes.
(3) The additional rate for a property class for a taxation year for the purposes of clause (2) (b) is determined in the following manner:
1. Determine the lowest rate that would raise an amount sufficient to fund rebates made under section 361 of the Act in respect of property in,
i. the commercial classes, if the property class is one of the commercial classes, or
ii. the industrial classes, if the property class is one of the industrial classes.
2. If the property class is one of the commercial classes, allocate to the property class the rate that will result in the rates on all the commercial classes being in the same proportion to one another as the tax ratios established under section 308 of the Act for the commercial classes.
3. If the property class is one of the industrial classes, allocate to the property class the rate that will result in the rates on all the industrial classes being in the same proportion to one another as the tax ratios established under section 308 of the Act for the industrial classes.
(4) In this section, “commercial classes” and “industrial classes” have the meanings ascribed to those terms by subsection 308 (1) of the Act.
Municipal levy restriction thresholds
4. The following tax ratios are prescribed for the purposes of subsections 311 (7) and 312 (7) of the Act:
1. 2.74 for the multi-residential property class.
2. 1.98 for the commercial classes.
3. 2.63 for the industrial classes.
Maximum tax ratios for 2003
5. (1) If section 8 of Ontario Regulation 171/01 applied to a property class in a municipality that was not an upper-tier or lower-tier municipality in 2002, the tax ratio established by the municipality under section 308 of the Act for the property class for 2003 shall not exceed the tax ratio calculated in the following manner:
1. Identify the general levy tax rate for the residential property class, as determined by the municipality for 2002 under section 368 of the Old Act.
2. Determine the increased residential tax rate by adding the tax rate identified in paragraph 1 and the rate for the special levy for the residential property class for 2002, as determined under section 8 of Ontario Regulation 171/01.
3. Divide the 2002 general levy tax rate for the property class that is subject to subsection 7 (2) of Ontario Regulation 171/01, as determined by the municipality for 2002 under section 368 of the Old Act, by the increased residential tax rate determined under paragraph 2.
(2) If section 8 of Ontario Regulation 171/01 applied to a property class in an upper-tier municipality in 2002, the tax ratio established by the municipality under section 308 of the Act for the property class for 2003 shall not exceed the tax ratio determined under the following rules:
1. Identify the general upper-tier levy tax rate for the residential property class, as determined by the municipality for 2002 under section 366 of the Old Act.
2. Identify the tax rate for the upper-tier special levy for the residential property class for 2002, as determined under section 8 of Ontario Regulation 171/01.
3. Multiply the upper-tier special levy tax rate determined under paragraph 2 by the upper-tier weighting factor determined under subsection (3).
4. Determine the increased tax rate for the residential property class by adding the tax rate identified in paragraph 1 and the product obtained under paragraph 3.
5. Divide the general upper-tier levy tax rate for the property class that is subject to subsection 7 (2) of Ontario Regulation 171/01, as determined by the municipality for 2002 under section 366 of the Old Act, by the increased tax rate for the residential property class determined under paragraph 4.
(3) The upper-tier weighting factor shall be determined in the following manner:
1. Determine the sum of the general levies for all property classes levied for upper-tier purposes in 2002 under section 366 of the Old Act.
2. Determine the sum of the general levies for all property classes levied for lower-tier purposes in 2002 under section 368 of the Old Act.
3. Add the amounts determined under paragraphs 1 and 2.
4. Divide the amount determined under paragraph 1 by the sum obtained under paragraph 3.
(4) For the purposes of paragraph 3 of subsection (1) and paragraph 5 of subsection (2), the general levy tax rate and general upper-tier levy tax rate for a property class that is subject to subsection 7 (2) of Ontario Regulation 171/01 excludes any additional rate for the property class referred to in clause 7 (2) (b) of that regulation.
Special levy for tax increase
6. (1) If, in 2003 or a subsequent taxation year, subsection 5 (1) or (2) or 7 (1) or (2) applies to a property class of the municipality, the municipality shall raise an amount by special levy equal to the amount by which its revenue was reduced by the application of that subsection to the property class.
(2) The special levy shall be raised under subsection 311 (4) or 312 (4) of the Act, as applicable, on all property that is not in a property class to which subsection 5 (1) or (2) or 7 (1) or (2) applies for the year.
Maximum tax ratios for 2004 and subsequent years
7. (1) If section 6 applied in the previous year, the tax ratio established by the municipality under section 308 of the Act for the property class for a taxation year after 2003 shall not exceed the tax ratio calculated in the following manner:
1. Identify the general levy tax rate for the residential property class, as determined by the municipality for the previous year under section 312 of the Act.
2. Determine the increased residential tax rate by adding the tax rate identified in paragraph 1 and the rate for the special levy for the residential property class for the previous year, as determined under section 6.
3. Divide the previous year’s general levy tax rate for the property class that is subject to section 3, as determined by the municipality for the previous year under section 312 of the Act, by the increased residential tax rate determined under paragraph 2.
(2) If section 6 applied in the previous year, the tax ratio established by the municipality under section 308 of the Act for the property class for a taxation year after 2003 shall not exceed the tax ratio calculated in the following manner:
1. Identify the general upper-tier levy tax rate for the residential property class, as determined by the upper-tier municipality for the previous year under section 311 of the Act.
2. Identify the upper-tier special levy tax rate for the special levy for the residential class for the previous year, as determined under subsection 5 (2) or this subsection, whichever applied in the previous year.
3. Multiply the upper-tier special levy tax rate identified in paragraph 2 by the upper-tier weighting factor for the taxation year, as determined under subsection (3).
4. Determine the increased tax rate for the residential property class by adding the tax rate identified in paragraph 1 and the product obtained under paragraph 3.
5. Divide the previous year’s general upper-tier levy tax rate for the property class that is subject to section 3, as determined by the municipality for the previous year under section 311 of the Act, excluding any additional rate calculated under subsection 3 (2), by the increased tax rate for the residential property that is determined under paragraph 4.
(3) The upper-tier weighting factor for a taxation year shall be determined in the following manner:
1. Determine the sum of the general levies for all property classes levied for upper-tier purposes for the year under section 311 of the Act.
2. Determine the sum of the general levies for all property classes levied for lower-tier purposes for the year under section 312 of the Act.
3. Add the amounts determined under paragraphs 1 and 2.
4. Divide the amount determined under paragraph 1 by the sum obtained under paragraph 3.
Maximum tax rates and revenue limit for 2003 if s. 3 (2) applies
8. (1) If the tax rates for the general levy imposed for 2003 or a subsequent taxation year by a local municipality under section 312 of the Act or by an upper-tier municipality under section 311 of the Act would otherwise result in revenues that would exceed the revenue limit for the municipality for the year, as determined under subsection (2), the maximum property class tax rate for the year for a property class in the municipality to which subsection 3 (2) applies in the year shall be the rate determined as follows:
1. Determine the total weighted assessment for the municipality by adding the weighted assessments for all of the property classes in the municipality, as determined under subsection 12 (4).
2. For the general upper-tier levy or local municipal levy, determine the residential rate for the taxation year by dividing the revenue limit for the municipality, as determined under subsection (2) or (4), as the case may be, by the total weighted assessment for the municipality determined under paragraph 1.
3. The maximum property class tax rate for the taxation year for a property class in the municipality to which subsection 3 (2) applies is the product determined by multiplying the residential rate for the taxation year, determined under paragraph 2, by the tax ratio for the property class for the taxation year as determined under section 5 or 7, whichever applies for the year.
4. For the purposes of paragraph 3, the maximum tax ratio for a property class for a taxation year is the tax ratio determined for the year under section 5 or 7 or, in the case of a local municipality that is a lower-tier municipality, the tax ratio adopted by the upper-tier municipality for the taxation year.
(2) The revenue limit for an upper-tier or local municipality for 2003 shall be determined in the following manner:
1. Identify the general levy tax rate for each property class, as determined by the municipality for 2002 under section 366 or 368 of the Old Act.
2. Increase the tax rate determined under paragraph 1 by adding the special levy tax rate for the property class for 2002, if any, as determined under section 8 of Ontario Regulation 171/01.
3. Determine the revenue for 2003 for each property class by multiplying the tax rate for the property class, as determined under paragraph 2, by the sum of the assessments for all properties in the property class.
4. Determine the revenue limit for the municipality for 2003 by adding the revenue for 2003, as determined under paragraph 3, for all property classes in the municipality.
(3) For the purposes of subsection (2), the assessment for a property in a property class is the assessment for the property for 2002,
(a) less the amount, if any, equal to the same percentage of the assessment as the percentage reduction, if any, under section 368.1 of the Old Act in the tax rate applicable to the property for 2002; and
(b) after all adjustments to the assessment, if any, made under subsection 366 (2.1) or 368 (2.1) of the Old Act.
(4) The revenue limit for an upper-tier or local municipality for a taxation year after 2003 shall be determined in the following manner:
1. Identify the general levy tax rate for each property class, as determined by the municipality for the previous year under section 311 or 312 of the Act.
2. Increase the tax rate determined under paragraph 1 by adding the special levy tax rate for the property class for the previous year, if any, as determined under section 6.
3. Determine the revenue for the year for each property class by multiplying the tax rate for the property class, as determined under paragraph 2, by the sum of the assessments for all properties in the property class.
4. Determine the revenue limit for the municipality for the year by adding the revenue for the year, as determined under paragraph 3, for all property classes in the municipality.
(5) For the purposes of subsection (4), the assessment for a property in a property class is the assessment for the property for the previous taxation year,
(a) less the amount, if any, equal to the same percentage of the assessment as the percentage reduction, if any, under section 313 of the Act in the tax rate applicable to the property for the year; and
(b) after all adjustments to the assessment, if any, made under subsection 311 (3) or 312 (3) of the Act.
part iii
Adjustment to taxes — subsection 329 (1) of the Act
Application of Part
9. This Part provides for the adjustments to be made under paragraph 3 of subsection 329 (1) of the Act for 2003 and subsequent taxation years in respect of changes in taxes for municipal purposes.
Levy change adjustment
10. (1) The amount determined under paragraph 2 of subsection 329 (1) of the Act for a taxation year in respect of a property shall be adjusted,
(a) by increasing it by the amount determined for the year under subsection (2), if the amount determined under subsection (2) is positive; or
(b) by decreasing it by the amount determined for the year under subsection (2), if the amount determined under subsection (2) is negative.
(2) The amount referred to in clauses (1) (a) and (b) for a taxation year is determined by multiplying the amount determined under paragraph 2 of subsection 329 (1) of the Act for the taxation year by the adjustment fraction calculated under subsection (3) for that year.
(3) The adjustment fraction for a taxation year shall be calculated using the formula,
in which,
“A” is the actual tax rate for the property for the taxation year, as described in section 11, and
“B” is the notional tax rate to raise the previous year’s levies for the property, as determined under section 12.
Actual tax rate for a taxation year
11. (1) For the purposes of subsection 10 (3), the actual tax rate for a property for a taxation year means the sum of each tax rate for the taxation year for municipal or school purposes applicable to property in the property class and local municipality the property is in.
(2) Despite subsection (1), a special local municipality levy or special upper-tier levy for a taxation year applicable to property in a property class shall be included as a tax rate in the calculation of the actual tax rate only if the levy applies to at least 50 per cent of the sum of the assessments of all properties in that property class.
Notional tax rate to raise the previous year’s levies
12. (1) For the purposes of subsection 10 (3), the notional tax rate to raise the previous year’s levies for a property means, in respect of a taxation year, the rate determined under the following rules for the property class and municipality the property is in:
1. For every general or special municipal levy for the previous year that applied to property in the municipality, determine the previous year’s levy amount under subsection (2).
2. Despite paragraph 1, only general or special levies that applied in the previous year to at least 50 per cent of the sum of the assessments for the taxation year for property in the property class in the municipality are included for the purposes of this subsection.
3. Determine the total weighted assessment for the municipality by adding the weighted assessment for the taxation year, as determined under subsection (4), for each property class to which the levy applied.
4. For each levy, determine the residential rate for the previous year by dividing the previous year’s levy amount, referred to in paragraph 1, by the total weighted assessment determined under paragraph 2.
5. For each levy, determine a class rate for each property class for the taxation year by multiplying the residential rate for the previous year, as determined under paragraph 4, by the tax ratio for the property class for the taxation year.
6. For each property class, the notional tax rate to raise the previous year’s levies is the sum of the class rates for the previous year, as determined under paragraph 5, for the property class and the tax rate for the taxation year for school purposes.
(2) For the purposes of paragraph 1 of subsection (1), the previous year’s levy amount shall be determined in the following manner:
1. Apply the tax rate for the previous year for each property class to the total assessment for property in the property class to which the levy applied, as determined under subsection (3).
2. The previous year’s levy amount is the sum of the amounts determined under paragraph 1 for the property classes.
(3) For the purposes of paragraph 1 of subsection (2), the total assessment for property in a property class is determined by taking the sum of the assessments for the previous year for each property in the property class and adjusting the sum for the changes in assessment that would produce the changes in taxes referred to in,
(a) paragraphs 2 and 3 of subsection 318 (6) of the Act, if the property class is not subject to Part IX of the Act; or
(b) paragraphs 2, 3, 5 and 6 of subsection 329 (2) of the Act, if the property class is subject to Part IX of the Act.
(4) For the purposes of paragraph 2 of subsection (1), the weighted assessment for a taxation year for each property class to which the levy applies is calculated using the formula,
in which,
“C” is the sum of the assessments for the taxation year for properties in the property class to which the levy applies,
“D” is the tax ratio for the property class for the taxation year.
(5) For the purposes of subsection (4), the assessment for a taxation year for a property in a property class shall be reduced by the same percentage of the assessment as the percentage reduction, if any, under section 313 of the Act in the tax rate applicable to the property for the taxation year.
Merged area deemed to be local municipality
13. If a municipal restructuring has occurred and tax rates for municipal purposes have been adopted for the taxation year pertaining exclusively to a merged area, the merged area shall be deemed to be a local municipality for the purposes of sections 10, 11 and 12 in respect of levies that apply only in the merged area.
Graduated tax rates
14. For the purposes of this Part, the tax rate for a property with respect to which a by-law under section 314 of the Act applies is the tax rate that would have applied if section 314 of the Act had not applied.
Previously unorganized territory
15. The following applies for the taxation year in which unorganized territory becomes part of a municipality and for the following two taxation years:
1. No account shall be taken of any adjustment made under paragraph 3 of subsection 447.68 (1) of the Old Act for 2002 and no adjustment shall be made under paragraph 3 of subsection 329 (1) of the Act in respect of changes in taxes for municipal purposes.
2. The property shall be deemed not to be part of the municipality for the purposes of this Part.
PART IV
PRESCRIBED ADJUSTMENTS UNDER SECTION 330 OF THE ACT
No adjustment for changes in taxes for school purposes
16. No adjustment shall be made for the purposes of the following provisions of the Act in respect of changes in taxes for school purposes:
1. Subsection 330 (2).
2. Paragraph 2 of subsection 330 (4).
3. Paragraphs 2 and 6 of subsection 330 (8).
Adjustment for 2003 and subsequent years, various provisions
17. (1) This section applies for 2003 and subsequent taxation years for the purposes of subsection 330 (2), paragraph 2 of subsection 330 (4) and paragraph 2 of subsection 330 (8) of the Act.
(2) The amount of the adjustment to the taxes for a taxation year in respect of changes in taxes for municipal purposes shall be determined using the formula:
in which,
“E” is the amount of uncapped taxes for the taxation year, and
“F” is the adjustment fraction for the taxation year determined under subsection 10 (3).
Adjustment, para. 6 of s. 330 (8) of the Act
18. (1) This section applies for 2003 and subsequent taxation years for the purposes of paragraph 6 of subsection 330 (8) of the Act.
(2) The amount determined under paragraph 5 of subsection 330 (8) of the Act in respect of the taxation year shall be adjusted,
(a) by increasing it by the amount determined under subsection (3), if the amount determined under subsection (3) is positive; or
(b) by decreasing it by the amount determined under subsection (3), if the amount determined under subsection (3) is negative.
(3) The amount referred to in clauses (2) (a) and (b) is the amount determined by multiplying the amount determined under paragraph 5 of subsection 330 (8) of the Act by the taxation year adjustment fraction determined under subsection 10 (3).
Taxes not to be lower than uncapped taxes
19. Despite subsection 330 (8) of the Act, if the taxes for municipal and school purposes for a taxation year, as determined under that subsection, are less than the uncapped taxes for the year, the taxes for municipal and school purposes for the year shall be equal to the uncapped taxes for the year.
Previously unorganized territory
20. The following applies for the taxation year in which unorganized territory becomes part of a municipality and for the following two taxation years:
1. No adjustment shall be made under any of the provisions of the Act listed in section 16 for the taxation year in which the unorganized territory becomes part of the municipality or for the following two taxation years.
2. Section 19 does not apply.
3. The property shall be deemed not to be part of the municipality for the purposes of this Part.
Special rule for assessments under ss. 33 and 34 of the Assessment Act
21. If an additional assessment is made under section 33 of the Assessment Act for a taxation year in relation to an improvement and, in relation to the same improvement, an additional assessment is made for the subsequent taxation year under section 34 of the Assessment Act, subsection 329 (7) of the Municipal Act, 2001 shall not apply with respect to the additional assessment for the subsequent taxation year.
Special rule, eligible property under s. 331 of the Act
22. (1) None of the following properties that becomes taxable for municipal and school purposes in 2003 or a subsequent year is eligible property for the purposes of section 331 of the Act in the year the property becomes taxable:
1. Property of a municipal electricity utility as defined in section 88 of the Electricity Act, 1998.
2. Property acquired under a transfer order under subsection 34 (1) of the Social Housing Reform Act, 2000.
3. Property of a non-profit housing corporation referred to in subsection 13 (1) of the Housing Development Act.
(2) Property that would otherwise be eligible property only because of a change in classification from one class in the commercial classes to another class in the commercial classes or from one class in the industrial classes to another class in the industrial classes is not eligible property for the purposes of section 331 of the Act.
Certain payments in lieu of taxes deemed to be taxes
23. Payments in lieu of taxes made under subsections 4 (3) and (4) of the Municipal Tax Assistance Act in respect of property described in paragraphs 1, 2 and 3 of subsection 22 (1) of this Regulation shall be deemed to be taxes for municipal and school purposes for the purposes of sections 329 and 330 of the Act.
Janet Ecker
Minister of Finance
Dated on March 6, 2003.