Property Assessment and Taxation

Overview

OFA continues to push for legislative changes that will improve the transparency of assessment and taxation of Ontario farm properties.

Effective for the 2009 taxation year, the Ontario government implemented a four-year reassessment cycle with a mandatory phase-in of assessment increases. Changes to the assessment appeal system also took effect for the 2009 taxation year.

For the 2017, 2018, 2019 and 2020 Taxation Years

The current province-wide reassessment is underway for the 2017-2020 taxation years, based on property values as of January 1, 2016.

Every property owner in Ontario should have received a Property Assessment Notice from the Municipal Property Assessment Corporation (MPAC) in the fall of 2016. This Property Assessment Notice showed the assessed value of your property as of January 1, 2016.

Municipal tax rates set for 2017, 2018, 2019 and 2020 property taxation years will be applied to the reassessment based on property values as of January 1, 2016. However, any increase in assessed value from January 1, 2012 to January 1, 2016 is to be phased in gradually in equal annual increments over the four years. The phase-in program would apply to residential, farm and managed forest property classifications. Any decrease in assessed value from January 1, 2012 to January 1, 2016 should have been applied immediately at the start of the 2017 taxation year.

It is critical for farmers to carefully review their 2017-2020 Property Assessment Notice for two important items. Please read the document below to learn the importance of reading and reviewing the property assessment notice in order to ensure you will be paying the correct taxes for 2017.

Farm Property Assessment Notice Information

Resolving Assessment Concerns

In general, if property owners feel that the assessed value or tax classification for their property is not accurate, they may file a Request for Reconsideration (RfR) with MPAC. In the case of farm properties, if property owners feel that the tax classification for their property is not accurate, they may file a Request for Reconsideration (RfR) directly with the Ontario Ministry of Agriculture, Food and Rural Affairs. Refer to the Farm Property Class Tax Rate Program Eligibility section below for more information.

By filing an RfR, you are asking for a review of your property’s assessment and/or classification. There is no fee for this review. For the 2017 taxation year, the deadline to file an RfR was February 8th, 2017. More information on this service is available by contacting MPAC at 1-866-296-6722.

Filing a RfR with MPAC is a mandatory first step of the assessment appeal process. After MPAC has completed their reconsideration process, property tax payers will have the option of filing a notice of complaint with the Assessment Review Board (ARB). The Assessment Review Board (ARB) is an independent tribunal of the Ministry of the Attorney General of the Province of Ontario. For more information, contact the ARB at 1-800-263-3237.

Farm Property Class Tax Rate Program Eligibility

Although MPAC may assess a property as farm, the property is taxed at the residential rate unless it is placed in the farm property class. The Ontario Ministry of Agriculture, Food and Rural Affairs administers the Farm Property Class Tax Rate Program. Eligible farm properties are placed in the farm property class and taxed at the reduced rate. For more information, contact the Ontario Ministry of Agriculture, Food and Rural Affairs at 1-877-424-1300.

Assessment of Farm Properties

In the case of farm properties, only bona fide farm-to-farmer sales are used to establish a farm’s current value assessment.

Components of a Farm’s Current Value Assessment

Farmland

Farmland is assessed according to its productivity value. Productivity rates are established using a process that determines rates for the best soils and reduced rates for less than optimum soil conditions.

Residence

The residence is assessed based off the replacement cost for a new residential structure less depreciation.

Residence Site

If a farm residence is occupied by the person(s) farming the property, a one-acre parcel of land is valued as farmland.

In most cases, if someone other than the person(s) farming the property occupies the residence, it is considered a non-farm residence. In this case, one acre of land is valued as  rural residential.

Farm Outbuildings

A farm outbuilding is any improvement, other than a residence, that is used for farming operations. Outbuildings are assessed based on their design and classified by their use (e.g., barn, silo, grain bin).

Other buildings

All other buildings not used in the farm operation are assessed based on their design and classified by their use (e.g., garage).

Value Added and Duel Use

MPAC values and classifies properties based on the use of the land and buildings. A farm property could be partitioned by MPAC into multiple property assessment classes when the property is used for more than one use.

Types of Property Classes include;

  • Residential
  • Farm
  • Commercial and;
  • Industrial

Under Section 44 of O.Reg 282/98  facilities used to conduct value added activities are classified in the commercial or industrial property class but the land underneath these buildings is valued as farm.

Value added activities generally refers to activities that enhance the value of (storable and marketable) farm products, while Dual-Use activities generally refers to value added activities that do not involve the farm products produced by the farmer.

Impact on Property Tax Bill

Engaging in value added activities can have significant impacts on a farmer’s property tax bill. To fully understand the potential impact value added activities can have on property taxes, consider the following example that demonstrates how the property taxes (using tax rates of a randomly selected rural municipality in Ontario) on a barn can change depending on the use of the barn.

Scenario 1: Farmer Uses Barn for Housing Livestock

In this Scenario, the barn is being used directly as part of the farming operation and thus the barn and the land underneath the barn is assessed as a farm and taxed at the farm rate.

Farm Use

Taxable Assessment

Tax Class

Taxes Owed

Land

$3,000

Farm (FT)

$10

Building

$30,000

Farm (FT)

$95

Total

$33,000

-

$105

Scenario 2: Farmer Uses Barn for Processing Agricultural products that he or she produced

In this Scenario, the barn is being used to process (add value to) an agricultural product produced by the farmer and thus the barn is assessed and taxed at the industrial rate while the land

underneath the barn is assessed as farm and taxed at the industrial rate. 

Value Added Use

Taxable Assessment

Tax Class

Taxes Owed

Land

$3,000

Industrial (IT)

$102

Building

$60,000

Industrial (IT)

$2,045

Total

$63,000

-

$2,147

Scenario 3: Farmer Uses Barn for Processing Agricultural Products that He or She Purchased From another Farmer

In this Scenario, the barn is being used to process an agricultural product that was not produced from the lands on which the barn is located and thus both the barn and the land underneath the barn are assessed and taxed at the industrial rate. 

Dual Use

Taxable Assessment

Tax Class

Taxes Owed

Land

$30,000

Industrial (IT)

$1,022

Building

$60,000

Industrial (IT)

$2,045

Total

$90,000

-

$3,067

OFA Policy on Value Added Activities

As the above example illustrates, the tax implications of engaging in value added activities is significant, and should be considered as part of any business plan when considering potential expansion plans. Value added activities such as on farm processing and retailing provides farmers with a potential avenue to increase and diversify their income streams. If the Ontario Agri-Food sector is to meet the Premier’s challenge the government of Ontario must enact tax policy that will encourage, rather than discourage, on farm value added activities which will increase farm revenue, leading to further investment and job creation by Ontario farmers.   

OFA’s standing policy proposes that property tax treatment of value-adding facilities should give special considerations to products grown in Ontario.

OFA recommends that if historically at least 51% of the product is gown and value-added by the same farmer(s) and at least 90% of the product is grown in Ontario, then the facilities should be subject to no more than 25% of the residential property tax rate. 

Additional Information

Growing Ontario, Fair property taxation for farmers –  Ontario Federation of Agriculture

Special Purpose Business Property Assessment Review –  Ontario Ministry of Finance

Farm Property Class Tax Rate Program, Booklet – OMAFRA

Information for New Farm Property Owners – OMAFRA

OFA Fact Sheets

Piecing Together the Farmland Tax Puzzle - Information for Beginning Farmers
(February 24, 2017)

Farm Property Assessment Notice Information
(September 20, 2016)

Farm Property Class Tax Rate Program Process
(June 2, 2016)

Ontario Farm Property Assessment Issues
(November 6, 2014)


Submissions & Correspondence

OFA submission to OMAFRA's Farms Forever Consultation
(June 29, 2017)

Pre-budget Submission to Standing Committee on Finance and Economic Affairs
(January 23, 2015)

Pre-budget Brief Letter to Minister of Finance
(January 27, 2014)

Pre-budget Submission to Standing Committee on Finance
(January 16, 2014)


Additional Information

Opportunity for OFA members to engage with MPAC
(March 17, 2016)

Procedures for Farmland Property Assessment in Ontario
(March 9, 2016)

Growing Ontario - Fair property taxation for farmers
(May 5, 2014)


News

Rising farmland values create disproportionate tax burden
(January 25, 2013 - Municipal Government, Farm Property, Property Assessment and Taxation)

Use constituency week to make your case for ag sector growth
(November 8, 2013 - Energy, Taxation, Property Assessment and Taxation, Natural Gas Infrastructure, Source Water Protection Framework and Assessment Tool )

OFA convention a time to celebrate successes and push forward
(November 22, 2013 - Property Assessment and Taxation, Open for Business , Local Food, Natural Gas Infrastructure)

Pursuing farm property tax fairness
(January 24, 2014 - Farm Property, Taxation, Property Assessment and Taxation)

The provincial budget is now an election platform
(May 2, 2014 - Agri-Food Research, Education, Business Risk Management, Property Assessment and Taxation, Local Food, Natural Gas Infrastructure)

Fix the farm property tax system in Ontario
(May 30, 2014 - Taxation, Property Assessment and Taxation, Provincial Funding Transfers to Municipalities )

OFA committed to working with new provincial cabinet
(June 24, 2014 - Land Use Policy & Farmland Preservation, Energy, Taxation, Property Assessment and Taxation, Local Food, Natural Gas Infrastructure, Food Literacy, Provincial Funding Transfers to Municipalities , Agri-Skills Training)

OFA ready to get to work with new government
(June 13, 2014 - Energy, Property Assessment and Taxation, Local Food, Natural Gas Infrastructure, Food Literacy, Provincial Funding Transfers to Municipalities , Agri-Skills Training)

OFA asks candidates to “Believe in Growing Ontario” with agriculture
(May 9, 2014 - Energy, Taxation, Property Assessment and Taxation, Natural Gas Infrastructure, Food Literacy, Provincial Funding Transfers to Municipalities , Agri-Skills Training)

Provincial budget promises “Jobs for Today and Tomorrow”
(February 26, 2016 - Municipal Government, Rural Economic Development, Energy, Property Assessment and Taxation, Natural Gas Infrastructure, Climate Change)

How to read your 2016 farm property assessment
(October 14, 2016 - Taxation, Property Assessment and Taxation)

Higher farmland property values risk skewing tax share
(November 10, 2016 - Farm Property, Taxation, Property Assessment and Taxation)

Working with ROMA for improved infrastructure in rural Ontario
(February 3, 2017 - Municipal Government, Rural Economic Development, Telecommunications, Property Assessment and Taxation, Drainage, Natural Gas Infrastructure, Provincial Funding Transfers to Municipalities )

OFA addressing skewed farm tax ratio with municipalities
(February 24, 2017 - Municipal Government, Taxation, Property Assessment and Taxation, Provincial Funding Transfers to Municipalities )

OFA disappointed provincial budget does not grow agriculture
(April 28, 2017 - Rural Economic Development, Agri-Food Research, Environmental, Energy, Education, Business Risk Management, Transportation, Telecommunications, Income Tax, Property Assessment and Taxation, Drainage, Natural Gas Infrastructure, Provincial Funding Transfers to Municipalities , Climate Change)


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