Toronto city staff proposes complete revamp of vacant home tax program amid rollout 'mess'

Toronto extends deadline for vacant home tax Toronto has extended the deadline to declare the occupancy of a home to avoid the vacant home tax by two weeks amid low responses.

Toronto city staff is proposing to completely change the vacant home tax program and cancel the bills for the thousands of undeclared properties following the “flawed” and unfairly “punitive” rollout.

In a report for action, published April 12, to be considered for next week’s council meeting, chief financial officer Stephen Conforti noted the declaration for the 2023 tax year experienced challenges, particularly with how the messaging was handled in informing homeowners of the requirement to declare property status annually as well as the challenges associated with the vacant home tax (VHT) program “specifically the timing, billing and declaration requirements and the reliance on a Notice of Complaint process to address properties deemed vacant following the declaration period.”

That's why several city divisions are undertaking a comprehensive review "to inform a complete redesign of the program." Staff said it will explore all options to improve the filing process with a focus on the use of existing data to ease the declaration process, revamping its communication strategy, providing ample time for declarations to be submitted as well as bestowing authority for staff to delay billing and payment due dates should targets not be met.

Staff noted a 15 per cent drop in declarations between the 2023 and 2022 tax years, with 80 per cent of the roughly 816,000 residential properties filing them in.

Several Torontonians were seemingly unexpectedly hit with a tax bill after failing to make their Vacant Home Tax declaration for 2023, prompting the city to deem their units unoccupied.

The deadline to declare the occupancy status of their residence was initially set for Feb. 29, but was later extended to March 15.

This tax charges homeowners one per cent of their property value if it is left vacant for more than six months in a calendar year. For the 2024 tax year, and every year after, that rate will be three per cent.

The city deemed more than 167,000 properties vacant after the deadline passed, leaving owners to rely on the Notice of Complaint process to inform them of their vacancy status – a period that will remain open until the end of the year.

After providing immediate, increased in-person supports, the report noted about 108,000 VHT charges on property tax bills were reversed as of Friday afternoon, boosting the declaration rate to 93 per cent of all residential properties.

Of the remaining 58,000 properties currently deemed vacant, city staff estimate more than 80 per cent of them were occupied last year based on their 2022 status, meaning they would not be subject to a VHT charge.

This is prompting city staff to seek council authority to confirm these properties were indeed occupied last year, so that the property owners will no longer be required to file a declaration or Notice of Complaint for the current tax year. If approved, a notice will subsequently be mailed to these property owners confirming their residence’s occupancy status and reversing VHT charges.

'Fix the mess'

Ward 12 Coun. Josh Matlow called the declaration process “flawed, “clumsy” and unfairly “punitive” earlier this month, noting how it signified how an idea can have merit but poor execution.

“It is our job to guide and direct city staff to come up with a process that is fair, understandable, reasonable, and isn’t punitive when somebody simply didn’t know to do something,” Matlow said.

Mayor Olivia Chow, in a motion proposing immediate fixes including waiving the late declaration fees, noted the rollout “caused confusion, anxiety and frustration for thousands of Torontonians,” touched on the program’s “clear” flaws and that the city is now going fix it.

“More must be done to fix the mess this year and ensure next year is delivered fairly. Budget Chief Carroll and I have asked City staff to bring forward a supplementary report on this item to City Council on waiving the $21 late fee for this year, communicating with impacted Torontonians that if your home was occupied you do not need to pay and reviewing the program design for next year, including the feasibility of using utility data to improve the system,” Chow wrote.

In a separate motion from Ward 1 Coun. Vincent Crisanti, he calls on council to immediately cancel the VHT program outright, noting it is not only “invasive to our taxpayers” but “disruptive” and “inconvenient beyond repair.”

The next city council meeting is set to take place on April 17.

With files from CP24’s Codi Wilson