In my last corporate blog, I discussed a new government loan program for small businesses affected by COVID-19. Unfortunately, even though vaccinations are increasing and restrictions are being lifted, COVID-19 is still having an impact on small businesses and some of these effects will be long-lasting. As a result, more programs are needed to support small businesses in getting through these challenging times.
One program being proposed by the City of Ottawa is reducing property taxes for small businesses. Under this proposal, small businesses in Ottawa would have their property taxes cut by 10%. The City estimates that there are about 4,700 small commercial properties that could be eligible for the property tax reduction, including small offices, restaurants, and daycares. For those individual taxpayers concerned that they will be held responsible by having their residential property taxes increased, the City has indicated this will not be the case. Larger businesses, such as big-box stores, will have an increase in their property taxes to subsidize the program. With roughly 7,300 large commercial properties in Ottawa, the City estimates that the property taxes for these owners would increase by less than 1%.
While this is certainly a positive development, implementing the program may be challenging. Many small businesses rent their space and it is their landlord who pays the property taxes directly to the City. As a result, mechanisms would need to be put in place to ensure that the property tax reduction is passed down from landlords to tenants.
Unfortunately, the property tax reduction will not take place this year. First, the City is waiting on the provincial regulations allowing it to create a new subclass of commercial taxpayers. Also, there will need to be a consultation period. As of right now, the final report should be brought to the City council in September and, if approved, would ideally be implemented in time for 2022. Given all the struggles small businesses have gone through during the pandemic, more programs like this are needed to ensure they survive well into the future.
This blog post was written by Jason Peyman, a member of the Real Estate and Business Law teams. He can be reached at 613-369-0376 or at jason.peyman@mannlawyers.com.
