Assessment Procedures for Vacancy Rebate Applications

Goal

To provide commercial and industrial property owners with information about Vacancy Rebate Applications.

Background

The Vacancy Rebate Application program provides property tax relief to owners of vacant commercial and industrial buildings through rebates issued by municipalities. The program also applies to other 'eligible property' as may be prescribed by the Minister of Finance.

The Municipal Property Assessment Corporation's (MPAC) role in the Vacancy Rebate Application program is to provide municipalities with the assessment information they need to calculate the tax rebate.

The Vacancy Rebate Program is governed by section 364 of the Municipal Act, 2001 (previously section 442.5 of the Municipal Act) and Ontario Regulation 325/01.

  • 364. (1) Every local municipality shall have a program to provide tax rebates to owners of property that has vacant portions if that property is in any of the commercial classes or industrial classes, as defined in subsections 308 (1). 2001,c. 25, s. 364 (1).

The vacancy rebate program for properties located in the City of Toronto is found in section 331 of the City of Toronto Act, 2006 .

Process

Any property owner of a commercial or industrial building or their authorized representative  may submit a Vacancy Rebate Application to their municipality by the last day of February in the year following the taxation year in respect of which the application is made.

The exception to this deadline is when MPAC issues an omitted assessment for either of the two preceding tax years. The deadline to submit an application for rebate is 90 days after the issue date the Property Assessment Notice issued by MPAC that accounts for the assessment update of the omitted assessment.

The owner or authorized representative may submit the following to their municipality:

  • one application for all vacancies that occurred on a property during the period of one taxation year; or
  • an interim application for the vacancies that occurred during the first six months of the year and a second application for vacancies that occurred during the last six months of the taxation year.

The owner or authorized representative must provide full evidence of the vacant area and ensure that their application to the municipality is complete.

Content of the Application

According to Ontario Regulation 325/01, the application must contain the following basic information for the eligible property:

  • name of the owner or agent/representative acting on the owner's behalf;
  • municipal address and assessment roll number;
  • dates of vacancy for the period covered by the interim or final application(s);
  • description of the vacant portion of the property (e.g., suite or unit number and floor number, or description of location within building); area of vacant space in square feet; and
  • any additional documentation that the municipality or MPAC may require to assist in identifying eligible property.

Eligibility Requirements

Buildings that are Entirely Vacant

Buildings or structures that are in the commercial or industrial property classes are eligible property if for at least 90 consecutive days:

  • no portion of the building or structure was used at any time in the 90-day period.

Buildings that are Partially Vacant

A portion of a building that is in one of the commercial property classes (office buildings, shopping centres, etc.) or in the landfill property class are eligible property if, for at least 90 consecutive days, it was:

  • unused; and
  • clearly delineated or separated by physical barriers from the used portion of the building; and the portion of the building was:
    • capable of being leased for immediate occupation,
    • was capable of being leased but not for immediate occupation because it was in need of or undergoing repairs or renovations or was under construction; or
    • was unfit for occupation.

A portion of a building that is in one of the industrial property classes (large industrial) will be eligible property if, for at least 90 consecutive days, the portion of the building was:

  • unused; and
  • clearly delineated or separated by physical barriers from the portion of the building that was used.

When calculating the amount of rebate, eligible property excludes any portion of the property that is:

  • exempt from taxes for municipal and school purposes for the year;
  • not included in the same class of real property for the taxation year as the eligible property; or
  • classified in the subclass for excess land.

For the purposes of this rebate, the following circumstances do not constitute "use," in the absence of other activity:

  • construction, repairs or renovations of the building, structure or portion of the building;
  • heating, cooling, lighting or cleaning of the building, structure or portion of the building; or
  • presence of fixtures (e.g., shelving units that are bolted to the wall or floor).

The following properties are not 'eligible property' for the purposes of the vacancy rebate program.

Seasonal Property: A building, structure or a portion of a building that is used for commercial or industrial activity on a seasonal basis.

Leased Property: A building, structure or portion of a building that is leased to a tenant in possession of a leasehold interest.

Subclasses: A building, structure or portion of a building that is included in a vacant land subclass.

Processing the Application

Once the Vacancy Rebate Application is received and reviewed by the municipality, the application is forwarded to MPAC. If required, MPAC may contact the property owner or authorized representative regarding their application.

MPAC will determine the assessed value attributable to the area identified as vacant and provide the municipality the assessed value for that area.

Next, the municipality will calculate the tax rebate attributable to the vacant area and notify the owner or authorized representative.

Additional information about the Vacancy Rebate Application program, including requests for application forms, should be directed to the local municipality.

Exceptions

Some municipalities have decided to phase out or no longer provide a Vacancy Rebate program. An inventory of the municipalities that have stopped this program or are phasing it out is included in Ontario Regulation 581/17.

The City of Toronto is not required, as of July 1, 2018, to have a program that provides tax rebates to owners of property that have vacant portions.

Related Information

Section 19(1) of the Assessment Act
Ontario Regulation 325/01
Ontario Regulation 581/17
Ontario Regulation 582/17 Section 331 of the City of Toronto Act, 2006
Section 331 of the City of Toronto Act, 2006
Section 364 of the Municipal Act, 2001

Note: This procedure has been developed to provide the public with a general understanding of the assessment procedure for vacancy rebate applications. The applicable law prevails to the extent there is any conflict between the procedure and the relevant law.

Note: The applicable law prevails to the extent there is any conflict between this information and the current law. This information is not intended to provide legal advice and should not be relied upon as such.