On January 4, 2012, Ontario Regulation 282/98 under the Assessment Act was amended to provide greater clarity and introduce new rules governing the property tax treatment of renewable energy installations. The amendments apply to facilities that generate electricity using solar energy, wind energy or anaerobic digestion of organic matter. The amendments are retroactive and take effect as of January 1, 2011.

For the following information: Small is up to 10 kW; Medium is over 10 kW up to 500 kW; and Large is over 500 kW.

Small, Medium or Large:  No new assessment or taxes. The assessment and tax classification of property will not change due to the addition of a renewable energy installation on the rooftop of a building.

Ground - Ancillary: Generation is not performed by corporate power producer and is secondary to main activity on property.
Small: No new assessment or taxes.
Medium: 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.
Large: Land, buildings and structures used for electricity generation are 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.
Small, Medium or Large: Land, buildings and structures used for electricity generation are taxed at industrial rate.

On-Farm Anaerobic Digestion

Anaerobic digestion is the process by which organic materials in an enclosed vessel are broken down by micro-organisms, in the absence of oxygen. Anaerobic digestion produces biogas (consisting primarily of methane and carbon dioxide). Anaerobic digestion systems are also often referred to as "biogas systems."  Anaerobic digestion facilities of any size that are located on a farm and are operated by the farmer will be taxed at the farm rate.

Wind Turbine Towers

Consistent with the treatment that has been in place since 2005, wind turbine towers will continue to be assessed at the rate of $40,000 per MW of installed capacity, except in the two situations noted above where the assessment would not be affected by the installation (rooftop installations and ground-based installations up to 10 kW).

Energy Efficiency Installations

Ontario Regulation 282/98 was also amended to provide clear policy regarding energy efficiency and energy conservation installations that use renewable energy technologies. As a result, the assessment of properties with an active solar heating or cooling system or a ground-sourced geothermal heating or cooling system will not be increased as a result of that improvement.

The separation based on ownership is equitable and supports the economic development goals attached to rural and northern communities in particular through green energy development. The division between small and large (over 500 kw) projects echoes that in place in the FIT programs and the Renewable Energy Approval (REA) processes. Overall, the property tax rule changes are consistent with provincial policy direction and provide clarity on what was a misunderstood system. AMO encourages our members to also pursue other potential sources of revenue from renewable energy projects including amenity agreements, building permits, road occupancy permits, and development charges.

Building Code Energy Efficiency Requirements Now in Force

Those applying for a building permit for a house or a range of other buildings on or after Jan. 1, 2012, must conform to enhanced energy efficiency requirements of Ontario’s Building Code.

Compliance paths for houses and other Part 9 residential buildings are set out in Supplementary Standard SB-12. This has been amended to recognize EnergyStar technical requirements as being compliant in the Code. Compliance paths for energy efficiency requirements in large buildings are set out in Supplementary Standard SB-10.

In addition, amendments to the Building Code require an inspection to be made and a permit to be issued, prior to people occupying certain new residential buildings, which include detached, semi-detached and row houses, for which an application for a permit is made on or after Jan. 1, 2012. The amendments to the Code include criteria that must be met for such an occupancy permit to be issued. The following link from the Ministry of Municipal Affairs and Housing has more information: click here.

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