HomeMy WebLinkAboutFND-007-20Clarington
Staff Report
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Report To: Council
Date of Meeting: March 23, 2020 Report Number: FND-007-20
Submitted By: Trevor Pinn, Director of Finance/Treasurer
Reviewed By:
File Number:
Andrew C. Allison, CAO
Resolution#: C-141-20
By-law Number: 2020-021
Report Subject: Property Tax Relief Related to COVID-19
Recommendations:
1. That Report FND-007-20 be received;
2. That the Interim Tax Levy By-law 2019-067 be amended such that penalties and
interest on unpaid taxes are not imposed on May 1, 2020 and June 1, 2020;
3. That the Fees and Services By-law 2010-142 be amended to authorize the Director
of Finance to waive service fees up to $50;
4. That the Director of Finance be directed to adjust the first due date in the 2020 Tax
Rates By-law from June 2020 to July 2020;
5. That no new collection actions be taken between April 1, 2020 and November 1,
2020;
6. That the Province of Ontario be requested to extend the due dates for education
taxes to be paid to the local school boards by 60 days;
7. That the Region of Durham be asked to provide the Regional Treasurer the authority
to amend the due dates for the Municipality to submit Regional taxes to coincide with
the local municipal due dates and collection of taxes; and
8. That all interested parties be advised of Council's decision.
Municipality of Clarington
Report FND-007-20
Report Overview
Page 2
The Municipality, like all other municipalities in Canada, is dealing with the financial realities
of the COVID-19 virus on the ability of taxpayers to pay property tax. At the same time, the
Municipality is limited in the type of relief that may be provided. This report is recommending
that relief for penalty and interest be provided starting May 1, 2020, a delay in the installment
dates for the final tax bill and a moratorium on new collection action occur until better
understanding of the financial impacts and the operations of the Municipality can be
determined.
1. Background
2020 Tax Dates and Payment Options
1.1 Council passed By-law 2019-067 on December 9, 2019 which authorized the interim tax
levy for the 2020 fiscal year. This by-law established interim tax due dates on February
20, 2020 and April 23, 2020. All property types follow these dates.
1.2 The final tax bills have not been printed yet; however, they would have the following
dates:
TaxpayerDate 1st Due Date 2nd Due Date
Residential and May 2020 June 18, 2020 September 17, 2020
Farm
Commercial, July 2020 August 20, 2020 September 17, 2020
Industrial, and
Multi -Residential
1.3 The Municipality typically allows payments in the following ways:
Cash and debit card at the Municipal Administration Centre (MAC) during regular
business hours
• Cheque at the tax counter, mail or through the mail drop located at the MAC
Municipality of Clarington
Report FND-007-20
Page 3
• Online payment through your financial institution (including mortgage companies)
• Pre -Authorized payments on the first business day of each month
1.4 The Municipality also has several minor service charges for NSF, pulling post-dated
cheques among others. There is currently no delegated authority to waive or cancel
these fees. It is recommended that the Director of Finance have the delegated authority
to waive or cancel tax related administrative fees up to $50.
Interest and Penalties
1.5 Penalties are added on the first business day of the month following a due date.
Interest is then added monthly on the first business day thereafter. As these form taxes,
there are limited abilities to waive or forgive these penalties and interest.
1.6 The first interim tax due date was February 20, 2020 and the second due date will be
April 23, 2020. Interest and penalties levied on March 1 or April 1 would relate to
payment already past due prior to any impact of COVID-19. Payments not made due to
impacts from COVID-19 would have interest and penalties levied on May 1, 2020 and
thereafter. Therefore, any consideration of penalty or interest relief would be starting
May 1.
1.7 In 2019, penalties in May were approximately $131,000 and in June they were
$107,156. Based on the first three months of 2020 staff estimate the 2020 penalties for
May and June could be $10,000 higher than 2019 without considering the additional
impact of COVID-19.
1.8 The Municipality includes penalties and interest revenue in its annual budget. The
decision to waive penalties and interest would reduce this budgeted revenue. This
reduction in revenue will be in addition to lost revenues from the closing of Municipal
facilities and cancellation of programs.
Pre -Authorized Payments
1.9 PAP plans are spread out payment of taxes over 12 months starting in December and
ending in November. For example, December 2019 is the first PAP for the 2020 tax
year. The previous year's taxes is divided by 12 to determine the monthly payment.
1.10 For residential PAP customers the monthly amount is adjusted for the July 1st payment
to spread the remaining balance over the period July to November. This is why in July
residents will see a change in their PAP amount.
1.11 For non-residential (commercial, industrial, multi -residential) PAP customers the
adjustment starts August 1st for the remaining four months.
Municipality of Clarington
Report FND-007-20
Page 4
1.12 In the past taxpayers have requested to skip a month of their PAP. These requests were
considered on a case by case basis and where approved, the payments were recovered
the following month. We have already had these requests for the April 1, 2020 PAP as
a result of the COVID-19 pandemic.
Taxes for the Region of Durham and Province of Ontario
1.13 The Municipality of Clarington collects property taxes for the Region of Durham and the
Province of Ontario. The Municipality remits to the Region and the Province regardless
if the collection of taxes has occurred. We keep any interest and penalties on these
uncollected funds; however, we are legally required to remit regardless if we have
collected or not. Significant relief or delay in payments could result in a negative cash
flow impact.
1.14 As at March 20, 2020 neither the Province nor the Region of Durham have provided any
guidance on relief of penalties, interest or changes in due dates.
Relief Provided by Other Governments and Organizations
1.15 The Federal Government has released measures to assist Canadians and small
businesses impacted by the COVID-19 virus.
Employment Insurance (EI) - been amended to waive the one week waiting
period for sick benefits, the requirement for a medical certificate is also waived.
• Emergency Care Benefit — provides up to $900 bi-weekly for up to 15 weeks to
provide support for workers who are quarantined or sick with COVID-19 but do
not qualify for El or parents with children who require care or supervision due to
school or daycare closures.
Emergency Support Benefit — for those who lose their jobs or faced with reduced
hours the Government is introducing a support of up to $5.0 billion to support
workers not eligible for El. Implementing the El Work Sharing Program for those
who agree to reduce their normal working hours as a result of developments
beyond their control.
• Goods and Services Tax credit - a one-time special payment in May 2020 for
those qualifying for the Goods and Services Tax credit to double the maximum
annual credit payment for the 2019-2020 benefit year.
• Enhanced Canada Child Benefit — increase the maximum annual Canada Child
Benefit (CCB) payment amounts by $300/child starting in May for the 2019/2020
benefit year (ie. May and June).
Municipality of Clarington
Report FND-007-20
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• The Government has also announced funding for wages up to 10% as well as a
delay in the Income Tax payment due date to August 2020.
• Canada Student Loan Payments — six-month interest -free moratorium on the
repayment of Canada Student Loans.
• Lower Registered Retirement Income Fund Minimum Withdrawal Amounts —
reducing the minimum withdrawals from RRIFs by 25% for 2020 in recognition of
the volatile market conditions and the impact on seniors' retirement savings. This
provides flexibility to seniors who are concerned about having to liquidate their
savings.
• Income taxes — filing for income taxes is delayed from April 30 to June 1 with
payment deferred to August 31, 2020.
1.16 The Province of Ontario has announced legislation which protects jobs for those
impacted by COVID-19.
1.17 The Region of Durham has not announced any changes to their property tax payments
or deferrals.
1.18 Canadian financial institutions have announced they will defer mortgage payments on a
case -by -case basis for those who need financial assistance. This is not forgiveness but
rather a postponing of payments, most likely while still accruing interest.
2. Options for Council
Penalty and Interest Relief
2.1 It is important to treat taxpayers equitable to ensure fairness of the system. Therefore, it
is recommended that penalties and interest continue to be applied March 1, 2020 and
April 1, 2020 as these relate to amounts that were already in arrears prior to the World
Health Organization and the Government of Canada recognizing COVID-19 as a
pandemic. It would be unfair to those taxpayers who made their payments on time in
February.
2.2 Section 354 of the Municipal Act, 2001 states that taxes shall not be written off except it
accordance with this section. There is no ability in Section 354 to write off taxes due to
financial hardship. The situations allowed typically are a result of a change in use, error
in calculation of taxes, fire or demolition of the building or require a tax sale to be
completed. Penalties and interest form part of taxes and therefore cannot be written off
except in certain circumstances.
Municipality of Clarington
Report FND-007-20
Page 6
2.3 Section 345 of the Municipal Act, 2001 deals with penalties and interest on late
payments. This requires a by-law to be passed in order to charge penalties and
interest. By-law 2019-067 established that penalties and interest in the amount of
1.25% per month shall be added for late payments of the interim tax bill. Any changes
to this would require a by-law to be passed.
2.4 The Municipality collects on behalf of the Province and the Region of Durham. We are
still required to remit payments to these organizations regardless of when payment is
actually received. This needs to be factored into any decision of Council as there could
be cash flow impacts.
Tax Due Dates
2.5 The interim tax due dates have been approved through by-law and were articulated to
taxpayers in the interim tax bills sent in January 2020. Some taxpayers have paid the
April installment already knowing that it was due April 23, 2020.
2.6 It could be seen as inequitable to change the due date of the interim tax bill at this point
in time. It could also result in financial institutions who pay on behalf of taxpayers
delaying payment to the revised due date, this will impact cash flow and could result in
the Municipality forgoing interest income in the near term resulting in increased tax levy
requirements in the long-term.
2.7 Any change in due dates to the interim tax levy would be required to be through by-law.
2.8 At this time the by-law for the final billing has not been brought to Council, dates could
be adjusted for the final instalments.
I Other Municipalities
3.1 The City of Toronto, which does not follow the Municipal Act, 2001, announced a 30-day
grace period for businesses to pay their property taxes.
3.2 In conversation with Durham Region area treasurers, on March 20, 2020 we have
agreed to propose similar changes across all area municipalities. Treasurers will be
providing reports to Council which propose similar changes to those recommended in
this report.
3.3 Municipal associations have been researching tax changes and have not, other than
Toronto, seen any planned changes.
3.4 A survey including 14 municipalities was conducted:
• Only Toronto is extending due dates for property taxes (and only businesses)
Municipality of Clarington
Report FND-007-20
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Two are considering writing off interest charges on property tax bills. Toronto
again is looking at providing interest relief for businesses only. Two are not
adding interest or penalties in April.
For PAPs, one is considering allowing customers to exit the PAP program upon
request; one is waiving fee for PAP changes; 12 are not considering changes.
4. Recommendations
4.1 It is recommended that penalty and interest relief be provided on May 1, 2020 and June
1, 2020 by not adding penalties and interest on those dates. This in effect allows penalty
free deferral of the April 2020 installment date for 60 days.
4.2 Fees charged to change a PAP payment, pull a post-dated cheque or NSF fees may be
waived, at the discretion of the Director of Finance up to $50.
4.3 Staff will not begin new collection enforcement, such as bailiff actions or tax sales, for
the periods May 1, 2020 to November 1, 2020.
4.4 It is recommended that the final tax by-law be brought to Council in April with payments
due dates changed to allow the June installment to be moved to July 2020. At this time
the August (non-residential) and September (all taxpayers) installment dates would
remain to ensure cash flow for continued operations. Relief could be revisited at a later
date depending on the economic situation.
5. Concurrence
This report has been reviewed by the Municipal Solicitor who concurs with the
recommendations.
6. Conclusion
It is respectfully recommended that those items outlined in section 4 be approved.
Staff Contact: Trevor Pinn, CPA, CA, Director of Finance/Treasurer, 905-623-3379 x.2602 or
tpinn@clarington.net.
Attachments:
Attachment 1: Draft By-law to Amend By-law 2010-142
Attachment 2: Draft By-law to Amend By-law 2019-067
There are no interested parties to be notified of Council's decision.
Attachment 1 to Report FND-007-20
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Coordinator at 905-623-3379 ext. 2131.
The Corporation of the Municipality of Clarington
By-law 2020-020
Being a by-law to Amend By-law 2010-142
Whereas on Tuesday, March 17, 2020, the Premier of Ontario declared a Provincial
Emergency in accordance with the Provisions of the Emergency Management and Civil
Protection Act, R.S.O. 1990, c. E.9;
And Whereas at its meeting held on March 23, 2020, the Council of the Municipality of
Clarington adopted the recommendations contained in Report FND-007-20 authorize
the Director of Finance to waive service fees up to $50.
Now therefore the Council of the Municipality of Clarington enacts as follows:
1. Add a new subsection 1.1 as follows:
1.1 Notwithstanding Section 1 the Director of Finance is authorized to waive
service fees associated with Schedule E to a maximum of $50.
Passed in Open Council this 23rd day of March, 2020.
Adrian Foster, Mayor
C. Anne Greentree, Municipal Clerk
Attachment 2 to Report FND-007-20
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Coordinator at 905-623-3379 ext. 2131.
The Corporation of the Municipality of Clarington
By-law 2020-021
Being a by-law to amend By-law 2019-067 a By-law to authorize an
Interim Tax Levy for 2020.
Whereas on Tuesday, March 17, 2020, the Premier of Ontario declared a Provincial
Emergency in accordance with the Provisions of the Emergency Management and Civil
Protection Act, R.S.O. 1990, c. E.9;
And Whereas the Council of the Corporation of the Municipality of Clarington deems is
advisable to amend Interim Tax levy By-law 2019-067;
Now therefore it be enacted that By-law 2019-067, an Interim Tax Levy, be amended as
follows:
1. That the following new section be added:
Section 8
Notwithstanding sections 6 and 7, the penalties and interest on unpaid taxes not
be imposed on May 1, 2020 and June 1, 2020.
Passed in Open Council this 23 day of March, 2020.
Adrian Foster, Mayor
C. Anne Greentree, Municipal Clerk