Ontario Ministry of Finance to clarify property tax treatment of renewable projects


The Ministry of Finance has issued a proposal to amend Ontario Regulation 282/98, which provide rules governing the property tax treatment of energy generation facilities. According to the Ministry, the goals of the amendments are to:

  • provide greater clarity and certainty to the property tax treatment of renewable energy installations for property owners, municipalities and the Municipal Property Assessment Corporation; and
  • ensure that property tax does not act as a disincentive to energy generation, particularly small-scale generation by persons who are not ordinarily in the business of generation.

Details of the proposal are available on the Regulatory Registry. The changes would result in different property tax treatment depending on the location and size of the project and on the nature of the person generating electricity:

  • for rooftop installations, there will not be any change to the property classification or assessment of the property, regardless of the size of the project;
  • for ground mount installations up to 10 kW, there also would not be any change to the property classification or assessment of the property;
  • for ground mount projects where generation is conducted by entities whose primary business is the generation, transmission or distribution of electricity ("corporate power producers), the applicable land, buildings and structures will be taxed at the industrial tax rate;
  • for ground mount projects between 10-500 kW where generation is conducted by entities other than corporate power producers, the applicable land, buildings and structures will be taxed at the rate applicable to the surrounding land use;
  • for ground mount projects over 500kW where generation is conducted by entities other than corporate power producers, the applicable land, buildings and structures will be taxed at the the rate applicable to the surrounding land use for the first 500kW and at the industrial tax rate for the remaining capacity.

Wind turbine towers would continue to be assessed at the rate of $40,000 per MW of installed capacity, except where they are rooftop mounted or ground mounted by under 10kW.

Although the proposed regulation is not perfectly clear, it seems that machinery and equipment used for the generation of electricity (e.g. solar panels, wind turbines and blades) will continue to be exempt from property taxation.

The proposal is one of several measures announced on Monday to improve certainty in Ontario's renewable power project market (see our previous posts regarding the waiver of the OPA's pre-NTP termination rights and improvements to the REA process).

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