Managed Forest Tax Incentive Program
You did it. You bought your dream home. A nice, secluded home in the centre of a large, forested parcel of land. Things couldn’t be better....or could they? Paying less in taxes is always nice and, believe it or not, that may actually be possible! That’s if you qualify for Ontario’s Managed Forest Tax Incentive Program (MFTIP) which recognizes the importance of forested lands and is administered by the Ministry of Natural Resources and Forestry.
The MFTIP is a voluntary program that allows qualified owners to have the eligible portion of their property reassessed and classified as Managed Forest. This portion would then be taxed at 25% of the residential municipal tax rate. So not only do you get to enjoy the tranquil atmosphere that comes with living in the woods, you also get to save some money while helping care for the land. That sounds like a win/win/win!
But before you can take advantage of this program, you need to make sure that you meet the eligibility requirements. The owner of the land needs to be one of the following:
i) A Canadian citizen or permanent resident
ii) A Canadian corporation, partnership or trust
iii) A conservation authority
The criteria for the forest itself is a little more detailed. It needs to cover at least 4 hectares (9.88 acres) not including residences and it must be on one property with one municipal roll number. Not only does the size of the area matter, but the number of trees is important as well. Your forest needs to have at least 1,000 trees of any size per hectare. There are also lower numbers of trees permitted for program eligibility, but tree diameter becomes important at that point.
Once determining that you and your property are both eligible, you’ll need to prepare a Managed Forest Plan which then needs to be approved. Good news...the hard part is done! The next step is just submitting the Managed Forest Plan, the MFTIP 10 year application form, an area verification form, an approval form and a copy of the most recent property assessment notice. In order to be approved for the following year, the application must be submitted by June 30th for new participants to have your property taxes adjusted for the following year.
You might be thinking that 10 years sounds like quite a long time to commit to forest stewardship. The program used to be 5 years, but it was updated in 2012 to become 10 years with a required 5 year progress report. So yes, it’s a long time, but being part of the program doesn’t render that portion of your property useless. You can still take part in recreational activities such as hiking, hunting or skiing. If you decide that you no longer wish to participate in the MFTIP, you can have your property removed from it at any time. All that’s required is to send written notice, a Landowner Report and the Report of Activities to the program’s administrator.
For those who are interested in buying and selling property, they may be wondering how this impacts them. It’s fairly straightforward in that the Managed Forest Plan is the property of the landowner who prepared it. This means that it is not transferred to the buyer and the plan itself cannot be released to the buyer without the seller’s permission. When selling a property that’s in the MFTIP, you need to send written notice, a Landowner Report and the Report of Activities as you would when withdrawing from the program. Should the buyer wish to continue on with the program, they must have their application received by the MFTIP administrator within 90 days of closing, otherwise the property will be removed from the program.
Once accepted into the MFTIP, it’s important that landowners ensure that their property continues to qualify throughout their enrollment in the program. The Ministry of Natural Resources and Forestry can conduct an audit at any time to make sure that a property continues to be eligible for the benefits. If they determine that the property was ineligible while these benefits were being received, the municipality may decide to collect the taxes that would have been owed had the property not been part of the program.
For those who believe that their property could qualify for the MFTIP, it’s definitely worth looking into. Does it require some work? Yes, but depending on the property, the tax savings can be substantial. And let’s not forget about the value it brings to the community by helping to protect an important natural resource. Saving the planet while saving some money sounds pretty good to me!