Changes to Toronto’s Vacant Home Tax and Small Business Property Tax Class

On October 11, 2023, Toronto City Council adopted changes to the Vacant Home Tax for the 2023 taxation year and to the Small Business Property Tax Subclass for the 2024 taxation year. A summary of some of the more pertinent changes is listed below.

Vacant Home Tax

• The definition of “Tenant” is expanded to include a business tenant, to account for situations where a property is assessed in the Residential Property Tax Class by the Municipal Property Assessment Corporation (MPAC) but is occupied by a tenant operating a business;
• A new exemption is provided for newly built housing inventory that is vacant, to apply for up to two consecutive taxation years;
• The requirement to satisfy the exemption for a property undergoing repairs and renovations is changed from “obtaining an opinion from the Chief Building Official and Executive Director, Toronto Building” to a requirement that repairs or renovations are being actively carried out without unnecessary delay; and
• The tax rate is being increased from 1% to 3% effective for vacancies occurring in the 2024 taxation year.

A reminder that the online portal to declare your 2023 occupancy status will open in early November 2023 and declarations must be made by the last business day in February 2024. You do not have to file a declaration if your property is not yet assessed, is classified as multi-residential, commercial or industrial, or is classified as vacant land, parking or a condominium locker. If you are eligible for an exemption from the Vacant Home Tax, you must still file a declaration by the deadline date and indicate which exemption you are claiming. Failure to file a declaration for a residential property will result in your property being deemed to be vacant and subject to the tax.

For more information on the Toronto Vacant Home Tax, including a list of the exemptions, go to: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/.

Small Business Property Tax Subclass

• Eligible property will now expressly exclude land with no buildings or structures; and
• Eligibility criteria will include a minimum current value assessment of $10,000.

The Small Business Property Tax Subclass was implemented in the 2022 taxation year and provides a tax rate reduction of 15% in the commercial tax rate for eligible properties. Property owners do not need to apply to have their properties included in the tax subclass. The City of Toronto automatically applies the tax subclass to eligible properties. As was done in 2023, a list of eligible properties should be made available through the City of Toronto’s “Open Data” portal and can also be verified by reviewing the property’s Property Assessment Notice for 2024. If a property owner believes they have an eligible property that was not included in the tax subclass, they will have the right to file a Request for Reconsideration by the stipulated deadline date, being 90 days after the City’s publication of the list of eligible properties.

For more information on the Small Business Property Tax Subclass, go to: https://www.toronto.ca/services-payments/property-taxes-utilities/small-business-property-tax-subclass/.

The Municipal & Land Use Planning Group at Aird & Berlis will continue to monitor developments in municipal taxation. Please contact a member of the group if you have questions or require assistance.