New Framework for Forfeited Corporate Property to Take Effect

On December 10, 2016 new rules for managing forfeited corporate property will take effect. The new rules are the result of consultations with the municipal sector that have been taking place since 2012. Highlights of these changes can be found below. The new framework will be implemented through the Forfeited Corporate Property Act (2015)  and the Escheats Act (2015), as well as through amendments to 23 other pieces of legislation including the Municipal Act.

Key highlights of changes:

  • Setting out the sole jurisdiction of the Minister over forfeited corporate property, which is defined as:
    • Real property and interests in real property that have forfeited upon dissolution of a corporation
    • Personal property and interest in personal property that have forfeited upon dissolution of a corporation, that is located in, on or under the forfeited corporate real property or that is necessary to administer the real property or ongoing operations/business on the real property
    • Personal property that has been left in, on or under forfeited corporate real property regardless of who owns it
  • Providing new management powers to the Minister, such as:
    • Collecting necessary information
    • Appointing a receiver-manager
    • Addressing interests that encumber forfeited corporate property (such as mortgages or liens)
  • Giving the Minister broad disposition powers, such as:
    • Relief from forfeiture
    • Transferring certain properties by order
    • Transferring charitable property to another charity
  • Allowing the Minister to determine amounts owing to the Crown and recover its costs, including:
    • Through a lien on the property
    • By making an application to the Court to require responsible former officers and directors of business corporations to pay the costs
    • From the proceeds of a sale of the forfeited property
    • Limiting the liability of the Crown when managing forfeited property

Amendments to the Municipal Act & City of Toronto Act:

  • Providing notice in relation to the tax sale process to the Minister responsible for the Forfeited Corporate Property Act, where a municipality is aware that the property is forfeited corporate property
  • Providing that no tax arrears certificate may be registered if an order cancelling encumbrances under the Forfeited Corporate Property Act, or a notice that the Crown intends to use the forfeited corporate property for Crown purposes has been registered, unless the Minister responsible consents
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New Paper Calls for Canadian Cities to Get New Taxation Powers

A new paper, authored by Harry Kitchen and Enid Slack, argues that large Canadian cities should have access to new revenue tools. According to the paper, cities face tough decisions about how to fund the complex and growing demands facing them, and need new sources of revenue to survive.

Canadian cities face many challenges – changing demographics, increased income inequality, increasingly complex expenditure demands, deteriorating infrastructure, and so on. These challenges have increased over the last few decades, yet the revenues available to cities to meet those challenges have remained largely the same – property taxes, user fees, and transfers from federal and provincial governments. For a long time, Canadian cities have been calling for access to more taxes, comparable with what large U.S. and European cities have.

Amongst the taxation sources the paper considers are increases to income tax, a municipal sales tax, tolls, vehicle registration and others:

slack-kitchen-revenue

You can read the full paper here.

Does the Land Transfer Tax Impact Housing Sales?

New research, from the Institute of Municipal Finance and Governance (IMFG), examines the impact of the City of Toronto’s decision in 2008 to introduce a Land Transfer Tax (LTT). It argues that the decline in housing sales in 2008 was more of a function of the global recession that began that year, than the city’s decision to apply a LTT to real estate transactions.

Previous research has shown that housing sales declined in Toronto once the City imposed the land transfer tax. This study, however, concludes that the negative impact of the tax on housing sales was statistically insignificant…

Read the full paper here.

New Paper Argues for More Municipal Revenue Tools

A new paper, published by the Institute for Municipal Finance and Governance and authored by Enid Slack and Harry Kitchen, argues that major cities in Canada should be given access to new revenue tools. Specifically, the authors describe the advantages and disadvantages of some of those potential revenue tools, and estimate the revenue that could be generated from a city income tax, city sales tax, and city fuel tax for eight large Canadian cities, including Toronto and Ottawa. According to Slack and Kitchen:

Large Canadian cities need access to more tax revenues, like their U.S. and European counterparts, if they are to meet their growing expenditure requirements. The range of services for which cities are responsible – from water, sewers, roads, and transit to social services and public health – has led many to suggest that the property tax cannot meet these challenges, nor is it the most appropriate tax for funding certain services.

Read the full paper here.

Government Releases PLT Consultation Summary

The government has released an overview of the ‘Open Houses’ it conducted in the late summer and fall of 2015 across northern Ontario to discuss the Provincial Land Tax (PLT). The summary identifies some of the common issues and concerns raised by property owners in unincorporated areas. As part of Ontario’s 2016 budget the government committing to continuing its consultations with northern communities about reforms to the Provincial Land Tax that were promised in the 2015 budget.

You can read the full consultation paper here.

For more:

2016 Ontario Budget Update

2016 Ontario Budget: Jobs for Today and Tomorrow 

AMO Presents Submission on Budget Implementation Bill

The Association of Municipalities Ontario (AMO) has presented a submission on Bill 144, the Budget Measures Act. Bill 144 is an omnibus bill that operationalizes many of the promises made in the government’s budget, and carries implications for 23 separate pieces of legislation. AMO’s submission is centred around four provisions in the bill that would impact municipal finances:

  • Tax Capping (Schedule 15, of the Municipal Act)
  • Indexing Benefits (Schedule 23, Workplace Safety and Insurance Act)
  • Airport PIL (Schedule 1 and Sections 1 and 2 of the Assessment Act)
  • Redirection of Electrical Utility PIL (Schedule 3 and Section 5 of the Electricity Act)

For more:

AMO Submission to the Standing Committee on Finance and Economic Affairs on Bill 144, Budget Measures Act, 2015 

Bill 144, Budget Measures Act, 2015

 

Municipalities Will Not Have Access to Land Transfer Tax

During Question Period today Minister of Municipal Affairs and Housing Ted McMeekin declared that municipalities in Ontario will not be given the option of using a land transfer tax.

Minister McMeekin:

Other than in Toronto, where the power already exists, our government will not be extending municipal land transfer tax powers to other Ontario municipalities…Looking at the consultation that we did, no one was asking for a municipal land transfer tax and there was a campaign of misinformation in the house…It just made sense to me that I was just going to stand up in the house and clarify, is what I did today.

Currently the City of Toronto is the only municipality in Ontario that is authorized to use the land transfer tax. The Association of Municipalities Ontario (AMO) had been advocating for an extension of the LTT, as well as other revenue tools that only Toronto possesses, to the rest of the province’s local governments.

AMO President Gary McNamara:

We’re asking for discretionary authority…Municipalities should have options that fit their communities. Ontario’s municipalities do have to maintain, replace and build infrastructure. They have to make sure that service responsibilities are met.

The extension, however, was opposed by the official opposition, the Canadian Taxpayers Federation, and the real-estate industry, especially the Ontario Real Estate Association (OREA), who worried that it would impose a chill on real-estate transactions.

The announcement comes on the same day that City of Toronto City Manager Peter Wallace said that Toronto’s finances would have “crashed and burned” if the City had not been able to rely on a hot real-estate market that provided high, but unsustainable revenue from the land transfer tax.

For more:

Ontario says cities outside Toronto cannot charge land-transfer tax

Toronto City Manager warns of ‘gap’ in budget

Economic Statement Includes Update on “Sharing Economy Advisory Committee”

When Finance Minister Charles Sousa tabled his fall economic statement yesterday it included an update on how the province plans to respond to the sharing economy. According to the update the province has established a Sharing Economy Advisory Committee with representatives from “key ministries” who will work together to oversee and coordinate Ontario’s approach to dealing with companies like Uber and AirBnb. The committee, which will report back during the 2016 budget, is tasked with examining potential legislative and regulatory solutions that could be implemented to address the disruption of traditionally regulated sectors like the taxi industry.

The economic statement also included updates on the business property tax capping program and the special purpose business property assessment review.

For more:

AMO Update: What Happened at Queen’s Park Today

2015 Ontario Economic Outlook and Fiscal Review  

Premier Says Large Commercial Assessment Appeals a ‘Provincial Issue’

Speaking at an event in Thunder Bay this week the Premier acknowledged that property tax reassessments on large commercial properties is a serious issue. The Premier also said that it’s a problem the government recognizes isn’t confined to one area of the province, and are currently being handled by MPAC.

The issue arose as the result of a recent case in Thunder Bay where the City lost an appeal to the Assessment Review Board (ARB), resulting on a significant drop in the assessed value of a milling belonging to Resolute Forest Products. The reassessment resulted in a loss of $39.6 million in revenue for the City.
Municipalities are frequently left in a lurch when large commercial property owners, like Resolute Forest Products, appeal their property tax assessments to the ARB.