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What you need to know about toronto’s new arts and culture property tax subclass

The City of Toronto has created a new arts and culture property tax subclass to support not-for-profit arts and culture organizations.

arts and culture property tax subclassFor decades the City of Toronto has offered reduced municipal tax rates to charities and heritage properties, and this year, a new subclass was created to support not-for-profit arts and culture organizations and incubators—what a new City by-law describes as “Creative Co-Location Facilities.” Qualifying properties will be eligible for a 50% reduction in property tax.

What is a “qualifying property”?

All or a portion of a property qualifies for the Creative Co-location Facility subclass if it meets all of the following conditions:

  • Minimum scale/physical space: the property must have either: (1) a minimum rentable area of 10,000 square feet and a minimum of five full-time tenants that are Creative Enterprises[1], (2) if the property is owned by the City, a minimum net rentable area of 5,000 square feet and a minimum of five full-time tenants that are Creative Enterprises, or (3) a minimum rentable area of 5,000 square feet and a minimum of 40 full time tenants that are Creative Enterprises.
  • Concentration of creative enterprises: a minimum of 51% of tenants at the property must be Creative Enterprises, and Creative Enterprises must occupy at least 51% of the rentable area.
  • Free programming and cultural activities for the public: the property must offer a minimum of 12 cultural programs[2] free of charge to the public over a minimum of 10 months in each calendar year.

In order to determine which portion of a property qualifies for the tax subclass, the following three figures are added:

  1. All space occupied by the Landlord for non-commercial activity, up to a maximum of 10% of the total rentable space;
  2. All leased space that has been leased or occupied by a Creative Enterprise for a minimum of five years, used for the purposes of providing cultural services, and charged a Below Average Market Rent.[3] The landlord or a group of tenants must provide at least two of the following incentives to the tenant:
    • free use of meeting or conference space;
    • free or subsidized use of office equipment;
    • consolidated buying power for office and other supplies;
    • access to free professional development and training or access to subsidized professional services such as accounting or legal services;
    • coordinated support for public programming; and
    • coordinated marketing initiatives or shared security, cleaning, reception, mail or catering services;
  3. The proportion of the common space and shared elements of the property, relative to the space that the tenant occupies in the total rentable area of the property.

It is expected that approximately 20 buildings in the City will qualify for the new subclass in its first year, and we will continue to monitor developments.

By Laura Alford


[1] “Creative enterprises” are defined as entities that produce cultural goods or services as defined by the Canadian Framework for Cultural Statistics.

[2] “Cultural programs” are defined as events, educational sessions or other activities that relate to the following activities: film-making workshops or the screening of films or video; author readings or workshops related to book publishing; presentations of performing or visual arts; interpretation of cultural and natural heritage; or live music presentations.

[3] “Below Average Market Rent” is rent that is at least 30% lower than the average market net rent for a similar space in a similar neighbourhood, and is 30% below the net rent paid in the same property by tenants that are not Creative Enterprises.

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McCarthy Tétrault LLP

McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally.McCarthy publishes a series of blogs to share information with companies to help them comply and manage their businesses. On the Inside Internal Controls blog we will share some of those blog posts sharing their expertise among others, in the areas of Competition/Anti-trust, Corporate and Commercial Law, Intellectual Property, Privacy, Environmental Law, Technology and Litigation. Read more here
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