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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.
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