Ontario’s prolonged freeze on property-value assessments is creating growing inequities in the province’s property-tax system, with some homeowners and businesses paying significantly more than their fair share of municipal costs, according to a new report from Ryan.

In the report, How Ontario Can Restore Fairness While Protecting Ontario Taxpayers, author Paul Sullivan argues that the suspension of property reassessments has distorted tax burdens by relying on outdated property values that no longer reflect market realities.

Part of Ryan’s Unfreeze Ontario initiative, the report cites such examples as a Mississauga strip-plaza owner who is paying an estimated $49,000 more annually in property taxes than she should, and a Fort Erie homeowner whose tax bill has risen 23% while newer, more valuable properties in nearby neighbourhoods pay less.

Sullivan contends that the longer the assessment freeze remains in place, the greater the inequities become, particularly for small businesses operating in lower-value commercial properties. He says the situation also creates uncertainty for homeowners, businesses and municipalities trying to plan future investments and expenditures.

The report notes that when reassessments eventually resume, property taxes will not automatically rise in line with increases in assessed property values. Instead, tax changes will depend on how individual properties have appreciated relative to the broader market within their municipalities. Properties that have increased in value less than the local average could see tax reductions, while those that have outperformed the market could face increases.

To ease the transition, Sullivan recommends that the Ontario government direct the Municipal Property Assessment Corporation to release preliminary value updates before reassessments resume. He also calls for a formal pre-roll consultation process similar to systems used in British Columbia, Alberta and Nova Scotia, allowing assessment concerns to be addressed before municipal tax rates are finalized.

The report says three-quarters of commercial real estate professionals surveyed support restoring regular reassessments to improve fairness, predictability and transparency in Ontario’s property tax system. Sullivan argues that delaying action will only deepen distortions and make the eventual transition more difficult.

Sullivan is a property-tax expert and author of the Unfreeze Ontario report series examining the impacts of Ontario’s suspended property reassessment system.

Ryan is a global tax-services and software provider that advises businesses on property tax, sales and use tax, income tax and other tax-related matters.

Pictured: Downtown Toronto

Photo: Shutterstock

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