TAX MATTERS - TRANSITION RATIOS AND AVERAGE TRANSITION RATIOS

Municipal Act, 2001

ontario REGULATION 385/98

formerly under Municipal Act

TAX MATTERS — TRANSITION RATIOS AND AVERAGE TRANSITION RATIOS

Historical version for the period December 19, 2022 to December 31, 2022.

Last amendment: 575/22.

Legislative History: 409/98, 426/98, 433/98, 498/98, 702/98, 400/99, 410/99, 514/00, 125/02, 367/03, 96/04, 118/04, 130/04, 156/04, 185/04, 186/04, 310/04, 4/05, 370/05, 466/05, 234/06, 351/06, 178/07, 204/08, 162/09, 56/10, 339/11, 62/12, 442/12, 313/13, 4/14, 148/14, 13/15, 240/15, 105/16, 292/16, 65/17, 95/17, 262/17, 22/18, 67/19, 3/20, 353/20, 334/21, 575/22.

This is the English version of a bilingual regulation.

CONTENTS

		Sections
	Definitions	0.1
	Transition Ratios	9
	Multi-Residential Property Class	9.1-9.3
	New Multi-Residential Property Class	10
	Landfill Property Class	10.2
	Property Classes New to Municipality	11
	Optional Property Classes New to Municipality	11.1
	Average Transition Ratios	12
	Transition Ratios and Average Transition Ratios for Certain Municipalities for Certain Years	13-17

Definitions

0.1 In this Regulation,

“commercial classes” has the meaning set out in subsection 308 (1) of the Act; (“catégories commerciales”)

“industrial classes” has the meaning set out in subsection 308 (1) of the Act; (“catégories industrielles”)

“optional property class” has the meaning set out in subsection 308 (1) of the Act; (“catégorie de biens facultative”)

“previous year” means the taxation year immediately preceding the qualifying taxation year; (“année précédente”)

Note: On January 1, 2023, the definition of “previous year” in section 0.1 of the Regulation is revoked and the following substituted: (See: O. Reg. 575/22, s. 1 (1))

“previous year” means, in respect of a taxation year, the immediately preceding taxation year; (“année précédente”)

“qualifying taxation year” means the 2022 taxation year; (“année d’imposition admissible”)

Note: On January 1, 2023, the definition of “qualifying taxation year” in section 0.1 of the Regulation is revoked. (See: O. Reg. 575/22, s. 1 (2))

“specified residential class” means the residential, farm, managed forest or new multi-residential property class; (“catégorie résidentielle déterminée”)

“unadjusted tax ratio” means, in respect of a property class for the qualifying taxation year,

Note: On January 1, 2023, the definition of “unadjusted tax ratio” in section 0.1 of the Regulation is amended by striking out “the qualifying taxation year” in the portion before clause (a) and substituting “a taxation year”. (See: O. Reg. 575/22, s. 1 (3))

(a) the tax ratio for the property class for the previous year, or

(b) if section 8 of Ontario Regulation 73/03 (Tax Matters - Special Tax Rates and Limits) made under the Act applied to the property class in the previous year,

(i) the tax ratio for the property class for the qualifying taxation year that is determined under subsection 7 (1) of that regulation if the property in the class is in a single-tier municipality, or

Note: On January 1, 2023, the definition of “unadjusted tax ratio” in section 0.1 of the Regulation is amended by striking out “the qualifying taxation year” in subclause (b) (i) and substituting “the taxation year”. (See: O. Reg. 575/22, s. 1 (3))

(ii) if the property in the class is in an upper-tier municipality, the tax ratio for the property class for the qualifying taxation year that would be determined under subsection 7 (1) of that regulation if that subsection were to apply to the upper-tier municipality and if subsections 7 (2) and (3) of that regulation were not to apply. (“coefficient d’impôt non redressé”) O. Reg. 162/09, s. 1; O. Reg. 56/10, s. 1; O. Reg. 339/11, s. 1; O. Reg. 62/12, s. 1; O. Reg. 442/12, s. 1; O. Reg. 4/14, s. 1; O. Reg. 13/15, s. 1; O. Reg. 105/16, s. 1; O. Reg. 65/17, s. 1; O. Reg. 22/18, s. 1; O. Reg. 67/19, s. 1; O. Reg. 3/20, s. 1; O. Reg. 334/21, s. 1.

Note: On January 1, 2023, the definition of “unadjusted tax ratio” in section 0.1 of the Regulation is amended by striking out “the qualifying taxation year” in subclause (b) (ii) and substituting “the taxation year”. (See: O. Reg. 575/22, s. 1 (3))

1.-8. Revoked: O. Reg. 56/10, s. 2.

Transition Ratios

9. (1) This section applies for the qualifying taxation year to a municipality if, in comparison to the previous year, the percentage of total tax revenue for the qualifying taxation year derived from tax on property in a class other than a specified residential class would be lower in the qualifying taxation year if the unadjusted tax ratio for the qualifying taxation year was applied. O. Reg. 56/10, s. 4 (1).

(2) If this section applies to a municipality, the municipality may establish a tax ratio for the qualifying taxation year for the property class referred to in subsection (1) that is greater than the unadjusted tax ratio for the class but not greater than the transition ratio determined for the class under this section. O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 4 (2).

(3) If a municipality establishes a tax ratio for a property class under subsection (2), the transition ratios determined under this section apply to the municipality for the qualifying taxation year except for the purposes of,

(a) the specified residential classes;

(a.1) the landfill property class; and

(b) an optional property class if the qualifying taxation year is the first year in which the optional property class applies in the municipality. O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 4 (3, 4); O. Reg. 95/17, s. 2.

(4) The following rules apply for the purposes of this section:

1. The total assessment of the properties in a property class for the previous year includes all assessments made for the purposes of taxation for the previous year that are made after the return of the roll for the previous year.

2. In determining the total assessment of the properties in a property class for the qualifying taxation year, a municipality may elect to exclude the assessment of a property in the property class,

i. if the current value of the property,

A. has, before any adjustment under subsection 19.1 (3) of the Assessment Act, increased by 100 per cent or such greater percentage as the municipality elects since 2012, or

B. has decreased by 25 per cent or such greater percentage as the municipality elects since 2012, and

ii. if the municipality also excludes the assessment of the property in determining the total assessment of the properties in the property class for the previous year.

3. An optional property class is considered to be a separate property class for the purposes of subsection (5). O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 4 (5-7); O. Reg. 442/12, s. 2.

(5) Subject to sections 9.2, 9.3, 10 and 11, the transition ratio for a property class for the purposes of subsection 308 (10) of the Act is determined as follows:

Note: On January 1, 2023, subsection 9 (5) of the Regulation is amended by striking out “10 and 11” in the portion before paragraph 1 and substituting “10, 11 and 11.1”. (See: O. Reg. 575/22, s. 2 (2))

1. Multiply the unadjusted tax ratio for the property class for the qualifying taxation year by the amount of the total assessment of the properties in that property class for the year.

2. Multiply the unadjusted tax ratio for the property class for the qualifying taxation year by the amount of the total assessment of the properties in that property class for the previous year.

3. Determine the weighted reassessment change for the specified residential classes by dividing “A” by “B” where,

“A” is the sum of all amounts each of which is an amount determined under paragraph 1 for a property class included in the specified residential classes, and

“B” is the sum of all amounts each of which is an amount determined under paragraph 2 for a property class included in the specified residential classes.

4. Determine the weighted reassessment change for the commercial classes by dividing “C” by “D” where,

“C” is the sum of all amounts each of which is an amount determined under paragraph 1 for a property class included in the commercial classes, and

“D” is the sum of all amounts each of which is an amount determined under paragraph 2 for a property class included in the commercial classes.

5. Determine the weighted reassessment change for the industrial classes by dividing “E” by “F” where,

“E” is the sum of all amounts each of which is an amount determined under paragraph 1 for a property class included in the industrial classes, and

“F” is the sum of all amounts each of which is an amount determined under paragraph 2 for a property class included in the industrial classes.

6. For each property class that is not included in the specified residential classes, the commercial classes or the industrial classes, determine the weighted reassessment change for the property class by dividing the amount determined under paragraph 1 for the property class by the amount determined under paragraph 2 for the property class.

7. Determine the adjustment factor for each property class by dividing “G” by “H” where,

“G” is,

(a) the weighted reassessment change for the commercial classes as determined under paragraph 4 if the property class is included in the commercial classes,

(b) the weighted reassessment change for the industrial classes as determined under paragraph 5 if the property class is included in the industrial classes, or

(c) the weighted reassessment change for the property class as determined under paragraph 6 if the property class is not included in the specified residential classes, the commercial classes or the industrial classes, and

“H” is the weighted reassessment change for the specified residential classes as determined under paragraph 3.

8. Determine the transition ratio for the property class for the qualifying taxation year by dividing the unadjusted tax ratio for the property class for the year by the adjustment factor for the property class determined under paragraph 7. O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 4 (8-10); O. Reg. 65/17, s. 2.

Note: On January 1, 2023, section 9 of the Regulation is amended by striking out “the qualifying taxation year” wherever it appears and substituting the first occurrence with “a taxation year” and every other occurrence with “the taxation year”. (See: O. Reg. 575/22, s. 2 (1))

Multi-Residential Property Class

9.1 (1) This section applies for the qualifying taxation year to a municipality if,

(a) in comparison to the previous year, the percentage of total tax revenue for the qualifying taxation year derived from tax on property in the multi-residential property class would be higher in the qualifying taxation year if the unadjusted tax ratio for the qualifying taxation year was applied;

(b) the unadjusted tax ratio for the multi-residential property class for the qualifying taxation year is equal to or greater than 2.0; and

(2) The transition ratio for the multi-residential property class for the qualifying taxation year is the greater of 2.0 and the transition ratio for the property class determined using the rules set out in subsection 9 (5). O. Reg. 65/17, s. 3.

Note: On January 1, 2023, section 9.1 of the Regulation is amended by striking out “the qualifying taxation year” wherever it appears and substituting the first occurrence with “a taxation year” and every other occurrence with “the taxation year”. (See: O. Reg. 575/22, s. 3)

9.2 (1) This section applies for the qualifying taxation year to a municipality if, in comparison to the previous year, the percentage of total tax revenue for the qualifying taxation year derived from tax on property in the multi-residential property class would be lower in the qualifying taxation year if the unadjusted tax ratio for the qualifying taxation year was applied. O. Reg. 65/17, s. 3.

(2) If the unadjusted tax ratio for the multi-residential property class is equal to or greater than 2.0, the transition ratio for the property class for the qualifying taxation year is equal to the unadjusted tax ratio. O. Reg. 65/17, s. 3.

(3) If the unadjusted tax ratio for the multi-residential property class is less than 2.0 and if the municipality establishes a tax ratio under subsection 9 (2), the transition ratio for the property class for the qualifying taxation year is the lesser of 2.0 and the transition ratio for the property class determined using the rules set out in subsection 9 (5). O. Reg. 65/17, s. 3.

Note: On January 1, 2023, section 9.2 of the Regulation is amended by striking out “the qualifying taxation year” wherever it appears and substituting the first occurrence with “a taxation year” and every other occurrence with “the taxation year”. (See: O. Reg. 575/22, s. 4)

9.3 (1) This section applies for the qualifying taxation year to a municipality if the percentage of total revenue for the qualifying taxation year derived from tax on property in the multi-residential property class would be the equal to the previous year’s if the unadjusted tax ratio for the qualifying taxation year was applied. O. Reg. 65/17, s. 3.

1. Take the greater of 2.0 and the transition ratio for the property class determined using the rules set out in subsection 9 (5).

2. The transition ratio is the lesser of the amount determined under paragraph 1 and the unadjusted tax ratio for the property class. O. Reg. 65/17, s. 3.

Note: On January 1, 2023, section 9.3 of the Regulation is amended by striking out “the qualifying taxation year” wherever it appears and substituting the first occurrence with “a taxation year” and every other occurrence with “the taxation year”. (See: O. Reg. 575/22, s. 5)

New Multi-Residential Property Class

10. For the 2017 taxation year, the transition ratio for the new multi-residential property class in a municipality is 1.0. O. Reg. 262/17, s. 1.

10.1 Revoked: O. Reg. 262/17, s. 2.

Landfill Property Class

10.2 (1) For the purposes of subsection 308 (10) of the Act, the transition ratio for the landfill property class in a municipality for the qualifying taxation year shall be determined as follows:

1. Multiply the unadjusted tax ratio for the landfill property class for the qualifying taxation year by the amount of the total assessment of the properties in that property class for the year.

2. Multiply the unadjusted tax ratio for the landfill property class for the qualifying taxation year by the amount of the total assessment of the properties in that property class for the previous year.

3. Determine the weighted reassessment change for the landfill property class by dividing the amount determined under paragraph 1 by the amount determined under paragraph 2.

4. Determine the adjustment factor by dividing “A” by “B” where,

“A” is the weighted reassessment change for the landfill property class as determined under paragraph 3, and

“B” is the weighted reassessment change for the specified residential classes as determined under paragraph 3 of subsection 9 (5).

5. Divide the unadjusted tax ratio for the landfill property class for the qualifying taxation year by the adjustment factor determined under paragraph 4.

6. Determine the transition ratio for the landfill property class for the qualifying taxation year by multiplying the amount determined under paragraph 5 by 1.05. O. Reg. 95/17, s. 3.

(2) The following rules apply to the calculation in subsection (1) for the 2017 taxation year:

1. For the purposes of paragraph 1 of subsection (1), the unadjusted tax ratio for the landfill property class is equal to the unadjusted tax ratio for the commercial property class.

2. For the purposes of paragraph 2 of subsection (1), the amount of the total assessment of the properties in the landfill property class for the previous year is deemed to be the amount of the total assessment of the properties in the 2016 taxation year that are classified in the landfill property class for the 2017 taxation year. O. Reg. 95/17, s. 3.

(3) Despite paragraph 6 of subsection (1), for the County of Lambton, the transition ratio for the landfill property class for the qualifying taxation year is determined by multiplying the amount determined under paragraph 5 of subsection (1) by 1.2. O. Reg. 95/17, s. 3.

(4) The following rules apply to the Municipality of Chatham-Kent:

1. For the 2017 taxation year, despite subsection (1), the transition ratio for the landfill property class is 5.752080.

2. For the 2018 taxation year and subsequent taxation years, despite paragraph 6 of subsection (1), the transition ratio for the landfill property class for the taxation year is determined by multiplying the amount determined under paragraph 5 of subsection (1) by 1.1. O. Reg. 95/17, s. 3.

(5) The following rules apply to the County of Elgin:

1. For the 2017 taxation year, despite subsection (1), the transition ratio for the landfill property class is 34.024061.

2. For the 2018 taxation year and subsequent taxation years, despite paragraph 6 of subsection (1), the transition ratio for the landfill property class for the taxation year is equal to the amount determined under paragraph 5 of subsection (1). O. Reg. 95/17, s. 3.

Note: On January 1, 2023, section 10.2 of the Regulation is amended by striking out “the qualifying taxation year” wherever it appears and substituting the first occurrence with “a taxation year” and every other occurrence with “the taxation year”. (See: O. Reg. 575/22, s. 6)

Property Classes New to Municipality

11. The following rules apply for the purposes of subsection 308 (10) of the Act in determining the transition ratio for a property class in a municipality for the qualifying taxation year:

Note: On January 1, 2023, section 11 of the Regulation is amended by striking out “the qualifying taxation year” in the portion before paragraph 1 and substituting “a taxation year”. (See: O. Reg. 575/22, s. 7 (1))

1. Subject to sections 10 and 10.2 and paragraphs 2 and 3 of this section, the transition ratio for a year for a property class other than an optional property class is the upper limit of the allowable range of tax ratios prescribed for the property class if no property was classified in the property class in the previous year.

2. If no property was classified in the commercial classes in the previous year and property was classified in the industrial classes in the previous year,

i. the municipality may elect to have the average transition ratio for the industrial classes prescribed in paragraph 2 of subsection 12 (1) apply to both the commercial classes and the industrial classes, or

ii. if paragraph 2 of subsection 12 (1) does not apply in the municipality, the municipality may elect to have the transition ratio for the industrial classes apply for the qualifying taxation year to both the commercial classes and the industrial classes.

Note: On January 1, 2023, subparagraph 2 ii of section 11 of the Regulation is amended by striking out “qualifying”. (See: O. Reg. 575/22, s. 7 (2))

3. If no property was classified in the industrial classes in the previous year and property was classified in the commercial classes in the previous year,

i. the municipality may elect to have the average transition ratio for the commercial classes prescribed in paragraph 1 of subsection 12 (1) apply to both the commercial classes and the industrial classes, or

ii. if paragraph 1 of subsection 12 (1) does not apply in the municipality, the municipality may elect to have the transition ratio for the commercial classes apply to both the commercial classes and the industrial classes. O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 6; O. Reg. 105/16, s. 2; O. Reg. 95/17, s. 4; O. Reg. 262/17, s. 3.

Note: On January 1, 2023, the Regulation is amended by adding the following section: (See: O. Reg. 575/22, s. 8)

Optional Property Classes New to Municipality

11.1 (1) For the purposes of subsection 308 (10) of the Act, the transition ratio for an optional property class if no property was classified in the optional property class in the previous year is equal to the tax ratio that would apply to the property that is in the optional property class if the optional property class had not been adopted.

(2) For the purposes of subsection 308 (11) of the Act, the average transition ratio for the commercial classes or the industrial classes, as the case may be, for the first year that an optional property class applies or ceases to apply in a municipality is equal to,

(a) if the optional property class is one of the commercial classes, the weighted average, for the previous year, of the tax ratios for the commercial classes as determined in accordance with subsection 308 (14) of the Act; and

(b) if the optional property class is one of the industrial classes, the weighted average, for the previous year, of the tax ratios for the industrial classes as determined in accordance with subsection 308 (14) of the Act. O. Reg. 575/22, s. 8.

Average Transition Ratios

12. (1) The following rules apply for the purposes of subsection 308 (10) of the Act for the qualifying taxation year:

1. The prescribed average transition ratio for the commercial classes is the weighted average of the qualifying taxation year’s transition ratios for the property classes within the commercial classes.

2. The prescribed average transition ratio for the industrial classes is the weighted average of the qualifying taxation year’s transition ratios for the property classes within the industrial classes. O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 7 (1-3).

(2) For the purposes of subsection (1), the weighted average of the qualifying taxation year’s transition ratios is calculated using the formula in subsection 308 (14) of the Act, except that the phrase “tax ratios” in the portion before paragraph 1 shall be read as “transition ratios” and the phrase “tax ratio” in paragraph 1 shall be read as “transition ratio”. O. Reg. 162/09, s. 3; O. Reg. 56/10, s. 7 (4).

(3) This section does not apply to determine transition ratios for the commercial classes or industrial classes, as the case may be, in the first year an optional property class applies in a municipality. O. Reg. 162/09, s. 3.

Note: On January 1, 2023, section 12 of the Regulation is amended by striking out “the qualifying taxation” wherever it appears and substituting the first occurrence with “a taxation” and every other occurrence with “the taxation”. (See: O. Reg. 575/22, s. 9)

Transition Ratios and Average Transition Ratios for Certain Municipalities for Certain Years

13. Despite sections 9 to 12, for the Town of St. Marys for the 2020 taxation year,

(a) the transition ratio for the industrial property class and the large industrial property class is 2.481186; and

(b) the average transition ratio for the industrial classes is 2.481186. O. Reg. 353/20, s. 1.

Note: On January 1, 2023, section 13 of the Regulation is revoked. (See: O. Reg. 575/22, s. 10)

14. Despite sections 9 to 12, the following ratios apply in the Township of James for the 2020 taxation year:

1. The following transition ratios:

i. 2.520418, for the multi-residential property class.

ii. 2.791014, for the commercial property class.

iii. 4.892200, for the industrial property class.

iv. 7.453106, for the large industrial property class.

v. 2.811142, for the landfill property class.

2. An average transition ratio of 7.357659 for the industrial classes. O. Reg. 353/20, s. 1.

Note: On January 1, 2023, section 14 of the Regulation is revoked. (See: O. Reg. 575/22, s. 10)

15.,16. Revoked: O. Reg. 22/18, s. 2.

17. Despite sections 9 to 12, for the Township of Ear Falls for the 2017 taxation year,

(a) the transition ratio for the industrial property class and the large industrial property class is 3.765375; and

(b) the average transition ratio for the industrial classes is 3.765375. O. Reg. 65/17, s. 4; O. Reg. 95/17, s. 5.

Note: On January 1, 2023, section 17 of the Regulation is revoked. (See: O. Reg. 575/22, s. 10)

Table 1 Revoked: O. Reg. 22/18, s. 3.

Tables 2-7 Revoked: O. Reg. 56/10, s. 9.