Ontario amends property tax treatment of renewable energy installation

January 11, 2012

On January 4, 2012, Ontario amended O. Reg. 282/98 under the Assessment Act to provide new rules with respect to the assessment of property taxes on renewable energy installations. These amendments apply to facilities that generate electricity using solar energy, wind energy or anaerobic digestion of organic matter. The amendments differentiate between rooftop and ground solar installations, as well as between entities whose primary business is the generation, transmission or distribution of electricity (corporate power producers) and persons who are not ordinarily in the business of electricity generation (ancillary producers).

For rooftop solar installations the amendments provide that 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. For ground-mounted installations, the property tax treatment will depend upon the size and location of the facility as well as who is conducting the generation.  Corporate power producers will be taxed at the industrial rate, regardless of the size of the facility. With respect to ancillary producers, no changes were made with respect to ancillary producers up to 10 kW. Ancillary producers of greater than 10 kW of solar or wind energy will be taxed at the surrounding land use rate for up to 500 kW and then at the industrial rate for the proportion over 500 kW. On-farm anaerobic digesters over 10 kW, which are operated by farmers, will be taxed at the surrounding land use rate regardless of size. These amendments took effect as of January 1, 2011.

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