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Business tax calculation

The Current Value Assessment (CVA) of your business property is the value which is determined by the Municipal Property Assessment Corporation (MPAC). This includes properties in the commercial, industrial and multi-residential property class.

Assessment values are currently based on a January 1, 2016 value. If the assessment value for your business property increases from the previous valuation, this increase is phased-in equally over the next four years.

For example, if your property value increases by a total of $100, then the CVA will increase $25 each year in 2017, 2018, 2019, and 2020.

Tax capping

As part of the introduction of CVA taxation the Province of Ontario set a limit or ‘cap’ on the per cent business property taxes can increase if the property value increases. This was to protect commercial, industrial and multi-residential properties from significant tax increases.

The criteria to determine if a property is capped is set annually, based on this criteria capping now only applies to commercial properties.

Tax increases for industrial and multi-residential properties are not capped as 2020 is the final year of the phase-out and no properties qualify for the cap.

This limit is now only available to commercial properties with taxes capped in the previous year.

If your business property is capped, your bill will have a section that explains the capping calculation and any tax increases for your property.

For each eligible property the cap is calculated based on the greater of:

  • 10% of the previous year’s annual capped taxes
  • 10% of the previous year’s annual taxes based on CVA

If the calculated taxes are within $500 of CVA taxes after the cap is applied, the property will pay taxes based on the CVA.

Tax claw back

The amount of taxes capped is funded through a “claw back” of assessment related tax decreases. The City will withhold a percentage of tax reductions to fund the shortfall in taxes for the properties being capped.

The claw back is only applied to properties with tax decreases withheld in the previous year.

If the property is within $500 of CVA taxes after the claw back is applied, the property will pay taxes based on the CVA and receive the full amount of their assessment related decrease.

Once a property is at CVA taxes it can no longer be capped or clawed back.

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