Property Tax Arrears Collection Process in Toronto-Ontario

[Navtaj Chandhoke]

Property Tax Arrears Collection Process in Toronto-Ontario

In the City of Toronto, approximately 96% of all property owners pay their property taxes on time.

The City takes action to collect overdue property taxes.

It is important to note that payments received are applied to the oldest outstanding balance first in accordance with the provisions of the City of Toronto Act, 2006.

If a property owner does not pay their property taxes by the installment due dates, the following actions will be taken:

1. Penalty / Interest Charges

A penalty of 1.25% on the unpaid amount of an installment will be added on the first day after the installment due date. A further 1.25% of the outstanding amount will be added as interest on the first day of each month thereafter, as long as taxes remain unpaid. Monthly interest charges are also imposed on any unpaid taxes from prior years. Penalty and interest rates are set by City by-laws, pursuant to the City of Toronto Act, 2006. Penalty and interest charges on overdue amounts cannot be waived or altered.

If taxes and charges are overdue, payments are applied to the oldest outstanding balance first. Fees may also be added when taxes are outstanding.

2. Property Tax Account Statement

Property Tax Account Statements (formerly known as Statements of Tax Account) are mailed to property owners in arrears advising that their property taxes are overdue.

These statements are mailed:

If a statement is issued to you, a fee will be added to your property tax account to cover the cost of producing and mailing the statement. This fee will be included in your statement amount.

Statement Fee: $16.35 each statement

3. Collection Letters and Telephone Contact

A Revenue Collector may contact owners of accounts with outstanding current year taxes, by way of phone calls or letters, to arrange either full payment or a firm, suitable payment arrangement.

4. Final Notices

Final Notices – Residential Property

Final Notices are issued as one last notification to the property owner of their outstanding balance prior to the issuance of tax arrears to a Bailiff.

In or around April of each year, Final Notices are mailed to those residential property owners with a previous year’s outstanding balance.

The Final Notice advises that they have 21 days to pay their taxes, or enter into a firm, suitable payment arrangement with the City, or their account will be issued to a bailiff for collection.

All accounts that fail to respond to the Final Notice are issued to a bailiff beginning in May.

Final Notices – Non-Residential Properties

In November of each year, “Final Notices” are mailed to all non-residential property owners with a current year’s outstanding balance.

The Final Notice advises that they have 21 days to pay their taxes, or enter into a firm, suitable payment arrangement with the City, or their account will be issued to a bailiff for collection.

All accounts that fail to respond to the Final Notice are issued to a bailiff beginning in January of the following year.

If a Final Notice is issued to you, a fee will be added to your property tax account to cover the cost of producing and mailing the notice. This fee will be included in your statement amount.

Final Notice Fee: $21.45 per notice

5. Issuance of Tax Arrears to a Bailiff

A bailiff serves a Notice of Issuance to Bailiff:

Residential Properties

If a residential property owner fails to respond to the “Final Notice” and has outstanding taxes from the previous year in the amount of $100 or more, the account is issued to a bailiff.

The City will issue a Notice of Issuance to Bailiff to the taxpayer indicating that their outstanding tax balance has been issued to a bailiff, and that any further payments on the outstanding amount must be made to the bailiff for collection of unpaid amounts.

Non-Residential Properties

If a non-residential property owner fails to respond to the “Final Notice”, the City will issue a Notice of Issuance to Bailiff to the taxpayer indicating that their outstanding tax balance has been issued to a bailiff, and that any further payments on the outstanding amount must be made to the bailiff directly.

If a Notice of Issuance to Bailiff is issued to you, a fee will be added to your property tax account to cover the cost of producing and mailing the statement. This fee will be included in your statement amount.

Notice of Issuance to Bailiff Fee: $57.15 per notice

Information on Bailiffs

The City of Toronto Act, 2006 permits municipalities to use the services of a bailiff in the collection of property tax arrears.

A bailiff is a duly appointed agent under contract with the City of Toronto to recover outstanding property taxes. The costs of the bailiff service are the full responsibility of the property owner.

Bailiff tax recovery actions include:

6. Municipal Tax Sale Proceeding

Once all other collection efforts are exhausted, and the City has been unable to secure payment of the tax arrears, or a firm, suitable repayment plan, the City commences Municipal Tax Sale Proceedings as prescribed by the City of Toronto Act, 2006.

Municipal Tax Sale proceedings can begin once taxes have been in arrears for at least three years. The first step in the Municipal Tax Sale process requires the City to register a Tax Arrears Certificate on title of a property.

The debtor has one year from the date of registration of a Tax Arrears Certificate on title of the property to pay the cancellation price (which includes all of the taxes levied and outstanding, all accrued penalty/interest and costs).

Failing payment within that year, or the entering into of an extension agreement, the Treasurer is required to proceed with a sale of the property through a public auction or public tender.

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