The following was extracted from the Ontario Ministry of Agriculture and Food website. It describes how property tax rates are established on farms in Ontario and the various criteria which must be met to receive the reduced farm rates on property taxes. Please refer to the contacts at the bottom of this article to receive further details on the program.
2010 Farm Property Class Tax Rate
Barry Sinclair - Manager, Property Tax and Farm Finance /OMAFRA
12 April 2001
15 July 2010
The Farm Property Class Taxation Program replaced the Farm Tax Rebate Program effective January 1, 1998.
Under the new taxation policy, farm properties meeting the eligibility requirements will be identified for the Farm Property Class and will be taxed at 25% of the municipal residential tax rate. The farm residence and one acre of land surrounding it will continue to be taxed as part of the Residential class.
Eligibility requirements for the Farm Property Class tax rate are consistent with those previously applied under the Farm Tax Rebate Program.
Effective program year 2000, a multi-year application was introduced. If you have filed an application that is still current, it will also be used to maintain eligibility in the 2010 tax year and future tax years.
Program year 2010 Eligibility Requirements for the Farm Property Class for the Taxation Year 2011
In order to be eligible for the Farm Property Class (25% of the municipal residential tax rate) all of the following criteria must be satisfied:
The property must be assessed as farmland. This is determined by the Municipal Property Assessment Corporation (MPAC).
The property must be used as part of a farming operation generating Gross Farm Income of at least $7,000 as reported to Canada Revenue Agency for income tax purposes.
If the Gross Farm Income is less than $7,000, you may still be eligible for the Farm Property Class tax rate if you meet one of the income exemptions. (See How to Apply for a Gross Farm Income Exemption.)
A valid 2010 Farm Business Registration number is required for the farm business operating on the land, unless one of the income exemption applies and is granted (see How to Apply for a Gross Farm Income Exemption). Under the Farm Registration and Farm Organizations Funding Act, a farm business generating Gross Farm Income of at least $7,000 as reported to Canada Revenue Agency for income tax purposes must register annually with AGRICORP. Continued eligibility for the Farm Property Class tax rate requires the yearly renewal of the Farm Business Registration number.
More than 50% of the property ownership must be held by Canadian citizens or Permanent Residents of Canada. If the property is owned by a business which is a sole proprietorship, the owner must be a Canadian citizen or Permanent Resident of Canada.
If the property is owned by a business which is a partnership, more than 50% of the profit or loss of the partnership must be allocated to the partners who are Canadian citizens or Permanent Residents of Canada.
If the property is owned by a business which is a corporation, more than 50% of the voting shares must be controlled by Canadian citizens or Permanent Residents of Canada.
How to Complete the Application Form Properly
This 2010 Farm Property Class Tax Rate Application Form must be completed and returned for processing if you wish to apply for the Farm Property Class tax rate for the 2011 taxation year.
Box A Read carefully and complete the "Non-Eligibility Acknowledgement", if you do NOT wish to apply for the program.
Box B Verify your language preference and telephone numbers.
Indicate changes where necessary.
Indicate whether or not you are a Canadian citizen or Permanent Resident. Please refer to the residency requirements on page 1 of this InfoSheet, under "Eligibility Requirements" - Item 4
Box C Verify the property information of each roll number, the description and the acreage.
Indicate, for each roll number, whether farmed by self and/or tenant.
Provide the owner or tenant's Farm Business Registration number for each roll number listed.
Box D Provide the name, address and telephone number of the tenant farmer.
Have the tenant farmer sign the application form. If you have more than one tenant farmer, please attach a separate Tenant Farmer Declaration for each property, signed by the tenant.
Box E Complete the applicable box (if you farmed the property yourself and qualify for an income exemption).
Provide written explanation to support your exemption request and/or request special forms from OMAFRA.
Box F Provide full name, address and telephone number of person operating the farm business on the land if a religious exemption from filing a Farm Business Registration form or paying the registration fee has been granted. If the person is a tenant, have him/her sign the declaration.
Box G Read carefully and sign the eligibility declaration and acknowledgement, as required.
Property Owner Declaration and Owner Acknowledgements
The declaration you provide in Box G will be used to maintain your property in the Farm Property Class (25% of the municipal residential tax rate) for taxation purposes in future years.
This will be an automatic process and, in most cases, you will no longer be receiving an annual Farm Property Class Tax Rate Application Form. However, you will be responsible for providing notification if any circumstance changes in your farming operation. Failure to do so will result in non-eligibility in the Farm Property Class and potential repayment of all applicable municipal property taxes.
It is your responsibility to maintain a valid Farm Business Registration number by paying the fee annually, if the Gross Farm Income reported was at least $7,000 in the previous tax year (2009), and/or to ensure that your tenant farmer has a valid Farm Business Registration number.
An annual Farm Property Class Tax Rate Application Form may still be required for some applicants.
For verification purposes and to maintain the integrity and accuracy of the Farm Property Class database, applications will also be sent to a selected group of clients, on a random basis each year.
The Due Date
If you receive an application form in 2010, your completed Farm Property Class Tax Rate Application Form must be returned to OMAFRA by the due date printed on the application form. This will allow time for the application to be processed and for early submission of eligible properties to the Municipal Property Assessment Corporation for the taxation year 2011.
If you do not submit your form by the due date, your property/properties listed on the form will not be eligible for the Farm Property Class and you will be required to pay property tax at the full (100%) of the municipal residential rate for the 2011 taxation year.
Legislation has been passed that allows OMAFRA to accept a late application up to the end of the taxation year, December 31, 2011, if there were mitigating circumstances that affected the property owner's ability to meet the original due date printed on the application.
If there has been a transfer of farm property or a change in the use of the property, actions taken by MPAC and the property owner will be based on the status of the property at the time the 2010 tax roll closes.
If the property is classified in the Farm Property Class for the 2010 taxation year, at the time the 2010 tax roll closes, there are two options:
In situations involving a new property owner who is not going to continue to farm the property, MPAC may issue a supplementary assessment to reclassify the property to the residential property class and the new owner will pay the residential tax rate for the remainder of the taxation year.
In situations involving a property being purchased by a farmer, who owns other land that has been classified in the Farm Property Class for 2009, or a new owner who meets the eligibility criteria, MPAC may choose not to reclassify the property and issue a supplementary assessment. As a result, the property will remain in the Farm Property Class.
If the property is assessed as a farm, but classified in the residential property class for the 2010 taxation year, at the time the 2010 tax roll closes, there are also two options:
In situations involving a new property owner who is also not going to continue to farm the property, MPAC will make no changes and the new owner will also pay the residential tax rate for the remainder of the taxation year.
In situations involving a property being purchased by a farmer, who owns other land that has been classified in the Farm Property Class for 2010 or a new owner or an owner who commences to farm the property and who meets the eligibility criteria, may contact OMAFRA and apply for the Farm Property Class tax rate for the remainder of the year.
If you have questions concerning the Farm Property Class, contact:
Ontario Ministry of Agriculture, Food and Rural Affairs 1 Stone Road West 2nd Floor Guelph, Ontario N1G 4Y2 Toll Free: 1-800-469-2285 Telephone: 519-826-3446 Fax: 519-826-3170 Email: firstname.lastname@example.org Website: www.omafra.gov.on.ca
For all inquiries, please state your Owner ID number, name, address, property roll number and telephone number.
If you have questions concerning your Farm Business Registration contact: