Tax Capping and Clawback

Commercial, Industrial and Multi-Residential Tax Mitigation Measures

In 1998, the Province of Ontario introduced the Tax Capping program to protect commercial, industrial, and multi-residential properties from significant property tax increases. This program limits or "caps" tax increase at 5 per cent as a result of changes to property value.

Capping limits landowners from paying the full amount of taxes based on the assessed value of the property as they are paying less tax than if they calculate their taxes using the general formula.

When properties experience a decline in property value, this would ordinarily lead to a decrease in property tax. However, the capping program uses a "claw back" to fund revenue shortfall resulting from the capping limits by withholding some or all of the reduction to property owners.

Annually, staff from local area municipalities and the Region review and analyze the assessment/tax data to determine which properties are affected by capping and claw back, and establish the claw back rates.

2016 Policy Change

In 2015, the Province announced new options and changes to the existing capping and clawback program that municipalities would be able to consider in 2016.

Effective 2016, municipalities have the option to exit or phase-out from the capping program, in order to move all properties towards paying taxes in line with their current value assessment, if doing so would have a limited impact on properties. The eligibility to exit or phase-out from the capping program is based on the status of properties from the previous taxation year.

These changes also allow municipalities (if eligible) to increase the prior year current value assessment capping limit from five per cent to 10 per cent, and to increase the threshold increase and decrease limits to up to $500 respectively.

On May 19, 2016, Regional Council approved the 2016 tax capping policy utilizing the new options available. which includes opting to phase-out the capping program for eligible property classes (multi-residential and industrial), over four years.

2016 Capping and Claw Back Rates

Tax Class Annualized Capping
Tax Limit
Prior Year Capping Limit Threshold Increase Amount Threshold Decrease Amount Claw Back Rate* Phase-out or Exit from Capping
Multi-Residential 10% 10% $500 $500 0% Phase-out Year 1
Commercial 10% 10% $500 $500 37.80% N/A
Industrial 10% 10% $500 $500 27.90% Phase-out Year 1

*Estimated

2015 Capping and Claw Back Rates

Tax Class Annualized Capping
Tax Limit
Prior Year Capping Limit Threshold Increase Amount Threshold Decrease Amount Claw Back Rate
Multi-Residential 10% 5% $250 $250 0%
Commercial 10% 5% $250 $250 36.42%
Industrial 10% 5% $250 $250 43.39%

2014 Capping and Claw Back Rates

Tax Class Annualized Capping
Tax Limit
Prior Year Capping Limit Threshold Increase Amount Threshold Decrease Amount Claw Back Rate
Multi-Residential 10% 5% $250 $250 0%
Commercial 10% 5% $250 $250 42.66%
Industrial 10% 5% $250 $250 5.05%

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