Tax Capping and Clawback

Starting with the 2020 taxation year, Niagara Region has fully exited the Tax Capping program for the previously mandated property classes of commercial, industrial and multi-residential.

Commercial, Industrial and Multi-Residential Tax Mitigation Measures

In 1998, the Province of Ontario introduced the Tax Capping program to protect commercial, industrial, and multi-residential properties from significant property tax increases. This program limits or "caps" tax increase at 5 per cent as a result of changes to property value.

Capping limits landowners from paying the full amount of taxes based on the assessed value of the property as they are paying less tax than if they calculate their taxes using the general formula.

When properties experience a decline in property value, this would ordinarily lead to a decrease in property tax. However, the capping program uses a "claw back" to fund revenue shortfall resulting from the capping limits by withholding some or all of the reduction to property owners.

Annually, staff from local area municipalities and the Region review and analyze the assessment/tax data to determine which properties are affected by capping and claw back, and establish the claw back rates.

2016 Policy Change

In 2015, the Province announced new options and changes to the existing capping and clawback program that municipalities would be able to consider in 2016.

Effective 2016, municipalities have the option to exit or phase-out from the capping program, in order to move all properties towards paying taxes in line with their current value assessment, if doing so would have a limited impact on properties. The eligibility to exit or phase-out from the capping program is based on the status of properties from the previous taxation year.

These changes also allow municipalities (if eligible) to increase the prior year current value assessment capping limit from five per cent to 10 per cent, and to increase the threshold increase and decrease limits to up to $500 respectively.

On May 19, 2016, Regional Council approved the 2016 tax capping policy utilizing the new options available. which includes opting to phase-out the capping program for eligible property classes (multi-residential and industrial), over four years.

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