New Construction Overview
- The Province has implemented a 1.60 percent maximum Business Education Tax (BET) rate for all new construction initiated after March 22, 2007.
- This has been implemented to immediately establish a more level playing field for businesses when determining where to build new manufacturing facilities or other business complexes.
- Businesses in municipalities with BET rates currently below 1.60 percent would be taxed at the existing lower rate.
- BET rates for each municipality are regulated under the Education Act through O. Reg. 315/08 amending O. Reg. 400/98.
New Construction Property Classes
The Ministry of Finance has created new property classes for the new construction tax rates:
- New construction Commercial
- New construction Shopping Centre
- New construction Office Building
- New construction Industrial
- New construction Large Industrial
Eligibility Requirements
- Application for the building permit must be received by the municipality after March 22, 2007
- Applications are made to the local municipality accompanied by the applicable fees.
- Municipalities submit building permit information to MPAC - including the date of the application.
- The application must be for the first building permit.
- Application must be in either the commercial or industrial property class.
Single Use Properties
- The new construction would be required to increase the current value assessment (CVA) of the entire property by a minimum of 50 percent over a period of 5 taxation years.
- Renovations to existing structures may be eligible if they meet the minimum 50 percent increase in CVA.
Mixed Use Properties
- The new construction would be required to have a combined CVA in the business portions of a minimum of 50 percent.
- Industrial / Commercial with CVA increase of minimum of 50 percent eligible
- Industrial / Commercial with CVA increase of say 18 percent not eligible
- Increases in value related to non-business classes are not included in the calculation.
- Commercial / Residential with commercial CVA increase of 50 percent eligible
- Commercial / Residential with commercial CVA increase of 25 percent not eligible
- Commercial / Residential with residential CVA increase of 100 percent not eligible
Commencement of 1.60 Percent BET Rate
- BET rate would take effect once construction is complete, eligibility requirements are met and new construction commences to be used.
- MPAC would then value the property according to the Assessment Act.
Process
- Building permit application is made to municipality.
- Upon application approval, application information and date of application are sent to MPAC.
- MPAC monitors property during construction stage (values property according to Assessment Act if current CVA increased by greater than 50 percent and confirms date property commences to be used)
- MPAC would then add the property into one of the new construction property classes:
- New construction Commercial
- New construction Shopping Centre
- New construction Office Building
- New construction Industrial
- New construction Large Industrial
- Property becomes eligible for the 1.60 percent maximum BET when added into new construction property class and commences to be used.