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February 16, 2006
Property tax arrears: Not a budget revenue for Toronto
  
The City of Toronto has a progressive and fair process for collecting unpaid property taxes. Each year, 96 per cent of Toronto’s 640,000 property owners pay their taxes on time. For the 4 per cent of property owners who do not pay on schedule, the City invokes a collection process that follows legislation and City Council direction that includes a Bailiff when required.

As of December 31, 2004, the cumulative total outstanding is $249 million (mostly from the past three years), which represents a $21.1 million reduction in receivables when compared to 2003 ($270 million).

Collecting on outstanding receivables such as property taxes, WILL NOT help this year’s budget shortfall.

Outstanding tax receivables form a priority lien on the property, with little or no risk of loss as the City will eventually own and sell the property to receive taxes owed. In addition, the City charges 15 per cent interest each year on overdue taxes.

Revenue from property taxes is recorded as revenue in the year that the taxes are billed. The amount payable by the taxpayer is set up as accounts receivable. When payments are made by taxpayers, the accounts receivable is reduced and cash is increased. The collection of taxes previously billed does not affect the revenue reported by the City and therefore has no effect on the financial position of the City.

Collecting taxes that were owed in previous years does not increase the City revenues at the time of collection since these monies have already been credited as revenue in preceding years.

The City of Toronto uses both internal collection procedures and Bailiff’s to collect on property taxes owing. Should a property owner not pay all taxes, penalties and interest, and City costs, the municipality will sell the property for all costs incurred in accordance with the Municipal Tax Sale Proceedings under provincial legislation. Interest charges cannot be waived, so Toronto’s property tax collectors are not only guaranteed to collect on property taxes owing, but will also collect interest on money owing at 15 per cent per year.

For a detailed description of the tax arrears program, please visit the City’s website at http://www.toronto.ca/taxes/taxarrears.htm.


Media contact:

Cindy Bromley
Finance & Administration Communications Manager
416-392-4993


 

 

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