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Commercial Taxation of Horse Farms
Update: Dec 4, 2004
The Chairs of the Association of Riding Establishment's MPAC Committee. Leslie Brooks and Jim Waechter along with the Executive Director of the Ontario Equestrian Federation Marcia Barrett met with MPAC in Pickering on Nov. 19 to discuss the issues surrounding the unfair commercial taxation of riding facilities.
Discussions took place with a number of things being clarified and it appears in the end there was a better understanding by MPAC of the horse industry and what the issues will be if this taxation continues. MPAC believes their hands are tied unless there is legislative change. According to them they are not actively going after Riding Establishments, although we have documentation that many stables are assessed from the road! They are focussed on properties that have had changes that may affect property assessments, such as a building permit. For example, this could be an addition to the barn or a new arena or barn or even an addition to your house - they will then re-assess the whole property!
It was also clear that there are a number of issues not truly understood as to what may happen in a re-assessment. It is also not clear what the legislation is. Any grey area will likely fall to commercial taxation. The property tax rates vary significantly from agricultural to residential to commercial. For example, in our township, the agricultural rate is .3% of assessed value, the residential rate is 1.2% and commercial rate is 4%. This varies by municipality and could be higher or lower. In some municipalities the residential and commercial rates are the same!
There is documentation that supports MPAC assessing property and buildings used for 'racehorse maintenance' and 'breeding' as agricultural - after that it gets very confusing and inconsistent. Update as of Dec 10th - we have documented cases of racehorse and breeding barns being re-assessed as commercial. This is very surprising! Any boarding and lesson facility that is being re-assessed is being assessed as commercial. This is a major problem since most of these facilities cannot afford this tax rate. If they increase prices to reflect this, no one but the rich will be able to afford this. Riding and showing will become a sport for the elite.
Many properties will be a mix - some storage may be assessed as agricultural, some barns and arenas or portions of these buildings may be assessed as commercial and some portion may be agricultural or personal. Personal use may be assessed as residential. The assessments can be retroactive for up to 2 years .... whenever the facility was built. This is already happening and putting many facilities out of business. Tax bills are received from a few thousand dollars to $10's of thousands!! We know of some that are getting $6000 increases and retroactive bills all the way to $100,000 and huge yearly increases.
Because 'raising livestock' is agricultural it appears that foaling or buying, training and selling horses should be considered agricultural. Personal horses may be agricultural or residential. This is very confusing and nothing is certain.
If a stable is re-assessed as commercial, we suggest you appeal. There is a short timeframe in which you can do this - be aware of the deadline. It has also been recommended not to sign off any re-assessed value. You can agree verbally and if nothing changes then this would be your assessment. If we get legislative change and you have not signed off then MPAC can re-assess again - even for past years.
Where we are now.... There are discussions as to whether the committee that is responsible for defining the 'Definition of a Farm' will get back together and invite the ARE committee chairs to discuss this issue and make recommendations as to where all horses should be - agricultural or ? This committee which includes MPAC and many policy advisors from various Ministries last met in August but did not have time to address the issues surrounding assessments of horse farms. This farm definition will help create the legislative change for horse establishments that we need. We believe that if the 'horse racing maintenance' is agricultural then all horse maintenance is agricultural from a property assessment perspective. A horse is a horse is a horse! At the same time, we are talking with the advisors and MPP's on an individual basis.
This affects all riders, horse owners, students, as well as the barn owners and all related horse industries and friends of horses!
We need everyone to get involved or the equine industry will be in deep financial trouble. Many barns have already gone out of business and others are considering their options - close or change their businesses. The sport may become a sport for the very rich unless something is changed.
There is a letter writing campaign to help address the severe financial hardship the Municipal Property Assessment Corporation is placing on Ontario's riding establishments through inequitable and inappropriate taxation. In the absence of clear policy direction or due regard for the largely agricultural nature of the land use, MPAC is arbitrarily assessing riding establishments in their entirety as commercial rather than agricultural. MPAC is an independent Corporation that takes direction from the Minister of Finance.
This issue was discussed extensively at the Association of Riding Establishments Annual Meeting and at several meetings at the Ontario Equestrian Federation Annual Conference in Kitchener in November. At the conference a letter writing campaign was launched. People were very eager to take the packages of letters and help get these signed and sent to the Ministries. These letters can be found on the OEF website www.horse.on.ca under 'Commercial Taxation of Riding Establishments Letter Writing Campaign'. They will give you a very good idea of the issues. Anyone 18 years of age or older can sign these letters. Please print them and pass them on to all boarders, students, parents of students, grandparents, friends, and industry partners to sign. All letters must be recorded and answered by the Ministries. You could also write a letter to your MPP.
If this does not get the necessary results, expensive legal action will be our only hope.
Please have a voice and help all horse enthusiasts by getting involved. This will affect all riders, owners and associated industries.
For more information, contact the Association of Riding Establishments of Ontario 1-888-353-5551 or Leslie Brooks & Jim Waechter at 519-696-3688 (Chairs of the ARE Committee to address this important issue).
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