Ontario’s property tax assessment appeals landscape has shifted from an informal administrative process to a litigious quasi-judicial battleground.
Legislative amendments, operational changes at the Assessment Review Board (ARB), activist municipalities and recent ARB and court decisions have propelled this transformation. The reassessment delay has magnified the impact of these developments.
Pending a reassessment, taxpayers should reconsider their property tax mitigation strategies as this delay has dramatically changed the nature of the property tax services required to successfully navigate Ontario’s property tax assessment review and appeal process.
Legal representation requirements
One of the major catalysts for this transformation was the imposition of restrictions on who could represent taxpayers in ARB proceedings.
In 2007, the Law Society of Ontario (LSO) introduced the requirement that, with some narrow exceptions, only LSO-licensed lawyers and paralegals could represent taxpayers in property assessment appeals.
Duty of advocates
In the context of minimizing property tax liabilities, an advocate must, at a minimum:
- Conduct a review of potential tax relief available in the relevant municipality.
- Consider the applicability of tax exemptions and tax classification changes.
- Complete a thorough review of all components of the property’s assessed value.
- Determine whether an equity adjustment to the assessed value of the property may be warranted.
- Be familiar with and avail themselves of all procedural and substantive aspects of the tax relief or assessment appeal process including applicable rules and decisions.
- Commence any required proceedings and file the applications necessary to obtain maximum property tax relief.
Restrictions on paralegal representation
While lawyers can advise and represent clients in all legal matters related to property taxation, paralegals have a limited scope of practice. Specifically, paralegals may not be authorized to perform certain tasks aimed at minimizing property tax liabilities, including:
Section 358 Municipal Act and section 325 City of Toronto Act applications are made to a local municipality’s treasurer, not to a tribunal, and consequently fall outside the scope of services paralegals may provide (see: Caruso v. The Law Society of Ontario, 2023 ONSC 6744 CanLII).
Tax grants and tax incentive programs are similarly government programs requiring applications and are beyond the scope of paralegal services.
Property tax exemptions fall within the exclusive jurisdiction of the Superior Courts and, by extension, outside the paralegal scope of practice.
Appeals of ARB decisions are made to the Divisional Court pursuant to section 43.1 of the Assessment Act. Paralegals may not represent clients before the Divisional Court.
Impact of changes at the Assessment Review Board
The ARB, in a marked departure from its previous informality, has adopted a formal approach to appeals.
In 2015, the ARB began publishing its decisions to the public legal database CanLII, and in 2017, substantially revised its Rules of Practice and Procedure, introducing a judicial-like process, albeit with specialized technical rules. Included was a rule limiting the ability of individuals to be both an advocate and witness in an ARB proceeding.
Concurrently, the ARB also introduced a procedural timetable for appeals, reducing the time available to prepare for a full hearing. The impact of the new procedural timeline was significant, with complex property assessment disputes placed on a rigorous, two-year procedural schedule.
The drive for efficiency continued in 2021 when the ARB introduced a “condensed” 49-week procedural schedule.
The current schedule provides merely 49 weeks to exchange pleadings, disclosure, and discoveries; source and exchange expert reports and replies; and file all required supporting materials and documents.
Due in no small measure to the reassessment delay, these changes, presumably intended to minimize the complexity and costs compared to litigation before ordinary courts, have had the opposite effect.
Breach of the ARB’s stringent deadlines has serious repercussions. Despite significant consequences for non-compliance, including dismissal of an appeal, the ARB will only extend a deadline in “exceptional circumstances”.
Unfortunately, expediency has sometimes taken precedence over the just disposition of cases on their merits.
ARB proceedings more litigious
Given the tight timelines, another, and presumably unintended, consequence is reduced opportunity for parties to engage in settlement discussions, and accordingly, ARB proceedings became more litigious.
This is evident in the substantial increase in the percentage of ARB procedural motion decisions.
In 2015, 10.3 per cent of the written decisions issued by the ARB were motion decisions; by 2023, this figure had tripled to 33 per cent. The focus of the ARB on legal and procedural matters has not had a salutary effect on substantive assessment disputes.
MPAC, municipalities are both adverse parties to taxpayers
In preparing to challenge an assessment, taxpayers must be cognizant of the changes in Ontario’s property tax system.
Mindful of these changes and perhaps even contributing to them, MPAC has significantly expanded its legal resources. Leveraging these resources, MPAC has sought to curtail the ability of taxpayers to challenge property assessments and, by extension, their property taxes.
Regrettably, the overarching goals of the legislation aimed at ensuring the correctness of assessments and the equitable distribution of taxes are often overshadowed by these legal disputes.
Municipalities, too, have become more assertive in assessment appeals, often positioning themselves in opposition to taxpayers. Support for MPAC from municipalities, particularly in motion hearings, has become increasingly common.
Taxpayers must contend with litigation against two government bodies.
In 2023, municipalities filed hundreds of property assessment appeals with the ARB. The impact of the proliferation of municipal appeals is illustrated by two recent decisions: Canadian Tire Corporation Limited c Toronto (City), 2023 CanLII 80603 (ON ARB), where the City of Toronto increased the assessment of a property by over $30 million, and Parkyards Inc. v Ottawa (City), 2023 CanLII 123166 (ON ARB), where Ottawa tripled a property’s assessment.
How should taxpayers respond to these changes?
As a result of the dramatic changes in Ontario’s property tax system, property owners and taxpayers should review and reassess their approach to property tax mitigation.
The evolution of the property tax system in Ontario means that the prevailing professional service models and business practices may not suit the current regulatory and legal environment and, as such, be untenable.
Aligning your property tax mitigation strategy with the property tax system as it exists in 2024 is necessary to secure optimal property tax outcomes for your commercial property.