As part of the 2020 provincial budget, municipalities were given the ability to create a small business tax subclass to provide a lower property tax rate for small businesses within the commercial tax class. Earlier this year, City Council directed City staff to define and develop a small business tax subclass to address the preservation and rebuilding of Toronto’s main streets and to offer tax reductions for a broad range of small businesses across Toronto.
The report recommends that a 15 per cent tax reduction be applied to small businesses within the commercial tax class. The remaining properties in the commercial tax class will see a property tax rate increase of 0.85 per cent in the municipal portion of property taxes to fund the tax relief. It is estimated that these reductions will apply to approximately 25,000 small businesses across Toronto, or 60 per cent of all commercial properties.
To qualify to be a part of this tax subclass, business are separated into two categories:
Businesses located downtown, on the central waterfront, in designated growth centres or avenues in the City’s Official Plan
- properties must be classified within the commercial or new commercial tax class
- properties must have a Current Value Assessment (CVA) less than or equal to $7 million
- lots must be 7,500 sq. feet or less, or for commercial condos a gross floor area of 2,500 sq. feet or less
Businesses located anywhere else in the city
- properties must be classified within the commercial or new commercial tax class
- properties must have a CVA less than or equal to $1 million
There is no application needed for this tax relief as all commercial properties will be assessed for their eligibility. There will also be a request for reconsideration or appeal process for properties owners who feel their property should be included in the new tax subclass.
This tax will be revenue neutral for the City. The provincial government is expected to match the municipal tax rate reduction with a corresponding reduction in the business education tax for all eligible small business property owners.
The full report to Executive Committee, Implementing a Small Business Property Tax Subclass, is available online: http://app.toronto.ca/tmmis/viewAgendaItemHistory.do?item=2021.EX27.7.
Quotes:
“Small businesses are the heart of this city, and these last 19 months have been extraordinarily tough for small business owners in Toronto. This new tax class will support new and existing small businesses located on Toronto's main streets, helping them to thrive in a post-pandemic environment and well into the future. We want small business owners to know we support them and we are committed to their prosperity.”
– Mayor John Tory
“Small businesses in Toronto over the last number of years have endured increases in property taxes beyond the average – and the creation of this tax class will change that. This is about creating fairness and equity in the tax system – so the small book store isn't subject to the same tax rate as the large shopping mall. Providing broad tax relief to small businesses is important for Toronto's diverse and thriving local economy.”
– Heather Taylor, Chief Financial Officer
“We have continued to manage the City's finances responsibly throughout the COVID-19 pandemic. The small business tax subclass will provide much needed relief to hardworking small businesses across our city and ensure they can continue to prosper in our city. It is another example of the work we are doing to support people through the worst of COVID-19 and the safe reopening of the city.”
– Councillor Gary Crawford (Scarborough Southwest), Chair of the Budget Committee
“Supporting small main street businesses is key to Toronto’s economic recovery. These businesses, from local barber shops or coffee shops to restaurants, bistros and specialty retailers are the heart and soul of their communities. We need to create policies that ensure these businesses can not only stay in our communities, but thrive in our communities.”
– Deputy Mayor Michael Thompson (Scarborough Centre), Chair of the Economic and Community Development Committee
“Reducing small businesses taxes across the city takes some of the strain off our main streets – many of which have been struggling throughout the pandemic. It's about creating a level playing field – making sure that our local mom and pops aren't taxed in the same way as large commercial businesses. It's important that small business owners know we're going to keep supporting them as we move into our recovery phase. Their success is our success.”
– Councillor Brad Bradford (Beaches-East York)
