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Pursuing farm property tax fairness in Ontario


January 24, 2014
By Mark Wales President Ontario Federation of Agriculture

Jan. 24, 2014, Guelph, Ont. – Farm property taxes are a significant cost
of doing business. With big farm property assessment increases being
phased in for Ontario farmers over the next three years, the Ontario
Federation of Agriculture (OFA) is taking a stand.

Jan. 24, 2014, Guelph, Ont. – Farm property taxes are a significant cost of doing business. With big farm property assessment increases being phased in for Ontario farmers over the next three years, the Ontario Federation of Agriculture (OFA) is taking a stand.

We’ve recommended six main changes to the Ministry of Finance affecting how farm property in Ontario is assessed and taxed.

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Our first recommendation involved advocating for a tax class adjustment on commercial grain elevators as proposed by the Ontario Agri-Business Association. And we’ve been successful.

A recent report to the Ministry of Finance by Parliamentary Assistant to the Minister of Finance, Steven Del Duca, recommended tax classification for commercial grain elevators be switched from industrial to commercial.

ASSESSMENT EVALUATION PROCESS NEEDS REVIEW

The second area we’ve been advocating for involves the method the Municipal Property Assessment Corporation (MPAC) uses to evaluate farmland.

The OFA believes the method currently used to assess farm property values is resulting in massive increases in farm property tax bills. There is a lack of qualified farmer-to-farmer sales to support the statistical method MPAC uses.

The OFA proposed MPAC improve their process to assess farm properties by ensuring farm sales only reflect sales made between real farmers.

MPAC ASKED TO INCREASE SAMPLE SIZE

We’re also asking MPAC to increase its sample size by using farm sales data from a larger geographic area. In the past, too few sales were used to determine farm assessment values in some parts of the province, resulting in inaccurate data.

The provincial government is listening to OFA’s recommendations and will be discussing this evaluation issue with the farm property assessment working group led by the Ministry of Finance.
 
Our third request is that the definition of “farm lands” be clarified. Conflicting Assessment Review Board rulings have left the meaning of the term farm lands within the Assessment Act in question.

For example, the Assessment Review Board determined farm lands to refer to ground only and excludes farm buildings in the decisions related to apple storage. OFA is asking the definition be clarified to include both ground and buildings.

RECLAIMING FARMLAND CLASSIFICATION

OFA’s fourth recommendation is to add a late application process to the Farm Property Class Tax Rate Program, allowing farm properties to be properly placed in the farm tax class. Some Ontario farmers who neglected to renew their Farm Business Registration in the previous year are faced with paying residential taxes on their farmland.

OFA believes farmers should be allowed to restore their eligibility for the farm tax rate through a late application process to reduce the regulatory and financial burden. We are also recommending a late application fee apply to discourage the late process from becoming the main process.

The fifth recommendation applies to tax classifications. OFA is asking that MPAC provide farmers with information on land tax classifications, like commercial or industrial, before they invest in changes to their businesses.

IMPLICATIONS OF VALUE-ADDED INVESTMENT

Our final recommendation is that farmers who are considering expanding their operation to include value-added activities could receive advice from MPAC on the implications to their property assessment.

OFA’s property assessment and taxation requests were also raised in our recent provincial pre-budget submission. We continue to advocate for key changes to improve fairness as part of the Ministry of Finance’s farm property assessment working group.


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