Improving Property Tax System for Green Energy

The Dalton McGuinty government is doing its part to foster the development of renewable energy projects in Ontario. In fact, the government has enacted amendments to improve the property tax assessment policies for land owners who develop and operate renewable energy projects on their own land. Regulation 282/98 under the Assessment Act was amended on January 4, 2012 and seeks to create greater clarity and introduce new rules with respect to property tax treatment. The amendments will take effect retroactively as of January 1, 2011. 

The hope, of course, is to encourage further development of these green energy projects by offering certain tax benefits to land owner developers. This represents another way that the Ontario government hopes to achieve its goal of reaching 13% generation capacity by renewable sources by 2030.

The benefits contemplated by the amendments will accrue to various generation facilities. Solar energy, wind energy and anaerobic digestion will all qualify for the new tax treatment.

The table below summarizes the treatment:

  Small      

(up to 10 kW)

Medium      

(over 10 kW up to 500 kW) 

Large      

(over 500 kW)

Rooftop  No new assessment or taxes.
Ground - Ancillary      

Use:
Generation is not performed by corporate power producer and is secondary to main activity on property

No new assessment or taxes. Land, buildings and structures used for electricity generation are taxed at the rate of the surrounding land use. This treatment also applies to large (over 500 kW) on-farm anaerobic digesters that are operated by farmers. Land, buildings and structures used for electricity generationare taxed at the rate of the surrounding land use for the proportion of assessment up to 500 kW, and taxed at the industrial rate for the proportion over 500 kW.
Ground - Professional Generation:
 Generation is conducted by corporate power producer
Land, buildings and structures used for electricity generation are taxed at industrial rate.

Regulation 282/98 also seeks to provide clarity with respect to energy conservation installations. It mandates that an assessment of properties that have certain active conservation installations will not increase.

The Ontario Government has also instituted the Ontario Clean Energy Benefit to help farms, families and small businesses make a transition towards greener energy. This program contemplates a rebate of 10% off the total electricity bill. Families, farms and small businesses who receive an electricity bill from a utility provider, including those who have a contract with an energy retailer are eligible to participate in this program. Qualified entities will have the rebate automatically applied to their energy bills for five years starting from January 1, 2011. This, in some cases, can translate into significant annual savings.