HomeMy WebLinkAboutFIN 19/99
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REPORT TO COUNCIL
FROM:
Gillis A. Paterson
Director of Finance & Treasurer
DATE: June 23, 1999
REPORT NUMBER: FIN 19-99
SUBJECT:
Revised 1998 Taxation Billing for Commercial, Industrial & Multi-residential
properties
RECOMMENDATION:
It is recommended that:
1. thc Director of Finance and Treasurer be authorized to issue the final adjusted 1998 Tax Bills
for commcrcial, industrial and multi-rcsidential properties with a duc datc of August 27,
1999;
2. the Direeetor of Finance & Treasurer be authorized to make any changes or undertake any
actions necessary, including altering due dates, in order to ensure the tax billing process is
completed;
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3. the Director of Finance & Treasurer notifY Members of Council in advance of the Bill 79
adjustment billing, including any communications issued and any changes in the billing
process.
4. The necessary By-Law No. 5527 as contained in Schedule A be read three times and
approved; and
5. The appropriate staff of the Town of Pickering be given authority to give effect thereto.
ORIGIN:
Director of Finance & Treasurer
AUTHORITY:
The Municipal Act R.S.O. 1990, as amended, and Regulations.
The Assessment Act, R.S.O. 1990, as amended and Regulations.
The Education Act, R.S.O. 1990, as amended and Regulations.
FINANCIAL IMPLICATIONS:
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The Minister of Finance has been making school board remittances on behalf of the Town of
Pickering to the various local boards to ease the cashtlow strain associated with Bill 79. The
Town of Pickering has to repay the Province $8.8 million by July 31, 1999. Based on current
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3 2 (!eport to Council FIN 19-99
Date: June 23, 1999
Subject: Revised 1998 Taxation Billing for Commercial,
Industrial & Multi-residential Properties
Page 2;
infonnation contained in the OPT A database, the Town of Pickering can collect $1.7 million)
from the clawback properties. These funds will be used to help repay the Provincial loan. The 1
balance will come from the FINAL 199 tax billing. '
EXECUTIVE SUMMARY:
Adoption of the above recommendations and the attached By-law provides for the revised 1998,
laxation billing for lhe cOllllllcrcial, industrial and Illulti-residential propcrties.
BACKGROUND:
The Town of Pickering will soon be in a position to calculate the final 1998 property tax,
adjustments in accordance with the "10-5-5" capping legislation (Bill 79) passed by the Province
on December 18, 1998 and implemented through various regulations. This legislation was put in
place to limit assessment refonn related increases to 10% in 1998 and 5% in each of 1999 and
2000 on commercial, industrial and multi-residential properties.
The 1998 property tax adjustments will be done using the Ministry supplied Ontario property\
Tax Analysis (OPT A) system, the 1998 assessment roll and the 1997 frozen assessment roll. To
do the revised 1998 tax billing, assessment activities such as Assessment Review Board (ARB)
appeal decisions, Section 442's have to be reflected in the OPTA database. As of June 21,1999,
the Provincial database has not yet reflected all of these changes. Once the database has been!
"updated", Town of Pickering staff will conduct a verification process to validate the integrity ofl
the database. It is anticipated that the verification process could take from four to six weeks:
before the database can be used to do the billing. After this process, Town of Pickering staff will;
then be in a position to issue the 1998 property tax adjustments. Recommendation 2 authorizes I
the treasurer to alter the date mainly due to the uncertainty of the billing schedule. The due date j
as established by the Treasurer would be governend by Section 399 subsection (6) of the
Municipal Act that states that the due date is fixed as 21 days after the billing date. The current
anticipated due date for the revised 1998 taxation billing is August 27, 1999. Recommendation 3,
will ensure that the treasurer infonns Pickering Council in advance of any changes due to the fact \)
it is anticipated that the Members of Council may receive phone calls from the Bill 79 taxpayers. j
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Finance staff are currently working with the OPT A database to analyze the impact of the 1998~
property tax adjustments and to develop an implementation strategy. The 1998 property tax .
adjustments for Durham Region lower tier municipalities is presented in table one. !
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Table One
1998 Property Tax Adjustments for Durham Region Single Tier Municipalities
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Municipality Multi- Residential Commercial Industrial
Class
Pickering $ 64,374 ($1,232,642) ($ 438,874) }
.
Ajax $158,638 $364,250 ($ 370,037)
Whitby $113,416 ($712,034 ) ($1,607,189) ri'r
Oshawa ($223,724) $1,480,958 , $2,489,962 i\;
Clarington $ 20,091 ($ 438,537) ($ 798,204) ."
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Scugog ($ 26,243) ($ 263,004) I. ($ 3,030)
Uxbridge ($ 55,795) ($ 114,820) ~ ($ 64,215) \ ",
Brock ($51,003) ($ 46,812) $ 69,597 -',I
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Report to Council FIN19-99
Date: June 23, 1999
Subject: Revised 1998 Taxation Billing for Commercial,
Industrial & Multi-residential Properties
Page 3
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The above table represents "net" dollar flow changes due to Bill 79. The negative values
represent payments due from the Region to the lower tier municipality. For the Town of
Pickering, the Region of Durham will reduce its requisition for the commercial and industrial
realty classes to make up for the tax revenues lost through decreases. This revenue loss is made
up by increases in other area municipalities. The Region of Durham will increase their requistion
to the Town of Pickering for the multi-residential class to reflect the additional amount of
$64,374.
Within each realty class there are tax reductions and increases due to Bill 79. Table One reflects
the net dollar changes due to Bill 79. Table Two provides a more detailed breakdown regarding
tax shifts among the various realty classes.
Table Two
Town of Pickering Breakdown of 1998 Tax Adjustments by Dollar Changes
Real Class Clawback Decrease Net Chan e
Multi-residential $74,093 -$9,720 $64,373
Commercial 1,630,249 -2,862,891 - 1,232,642
Industrial 72.324 -511.198 -438.874
Total $1.11!i.666 - $3~~ :$.1.735.889
For the clawback properties, the dollar changes vary based on the assessed value of the property
and the 1997 taxes paid. Table Three provides a breakdown of the number of 1998 tax
adjustments by realty class.
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Table Three
Town of Pickering Breakdown of 1998 Tax Adjustments by Realty Class
N b fP rf
urn er 0 rope les
Realty Class Clawback Capped Increases No Impact
Multi-residential 6 3 0
Commercial 220 349 70
Industrial 40 126 38
Total 2.66 ill lnB
Table Three indicates that there will be approximately 266 properties having to pay an additional
amount for their 1998 taxes. The 478 property owners under the capped increase category will
receive a credit on their revised 1998 tax bill and will have that credit applied to their 1999
FINAL taxes.
Proposed Bill 79 Billing Schedule
The following is a tentative schedule for the 1998 and 1999 billing and communication process.
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Mailing of pre-billing written communication (tax alert July 9, 1999
letter) to property owners who will be subject to a clawback
as a result of Bill 79. (Property owners who experience a
clawback that is greater than $1,000 or 10% increase over
their original 1998 tax bill will receive the tax alert letter).
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Calculations of rebates for charitable organizations and July 23, 1999
processing of payments
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Report to Council FIN 19-99
Date: June 23, 1999
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Subject: Revised 1998 Taxation Billing for Commercial,
Industrial & Multi-residential Properties
Page 4
Taxation staff verify 1999 OPT A database and process the September, 1999
final residential installment due date.
Final 1999 Due Dates October 29 & November 30
An area of concern is cashflow management for those properties having a clawback for 1998
taxes and having to pay their 1999 TOTAL taxes all within a five-month period. Taxation staff
are proposing to issue a tax alert letter only to those properties who are subject to a clawback
and where the clawback is either greater than $1,000 or the increase is 10% higher than the
original 1998 tax bill. Taxation staff are in a position to issue pre-billing tax alert notices using
the current information provided by the OPT A database. (The information in this database has
not been verified, however, before the tax alert letter would be issued, a preliminary review
would be conducted). Schedule B has a sample letter that would be issued to the perspective
property owners.
Charities
Under Section 442.1 of the Municipal Act, registered charities in any of the industrial and
commercial property tax classes are eligible for a property tax rebate equal to 40% of the
property taxes paid. The Town of Pickering has received approximately seven applications for
the property tax rebates. Taxation staff will verify their registered charity status with Revenue
Canada and will then issue their corresponding rebate cheques.
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Proposed Due Dates
Finance staff are proposing that the 1999 final tax bill will have October 29 and November 30 as
the installment due dates. This will provide the 1998 clawback property owner two months to
manage their cashflow to meet the first installment due date.
Communication Strategy
The 1998 adjustments for properties impacted by Bill 79 are complex and will be difficult to
convey to property owners. Given the complexity of the legislation and the myriad of issues to
be covered in order that taxpayers understand their tax bills, the following communication
strategy is recommended:
. Written pre-billing communication to property owners subject to "clawback".
. Briefing notes to be prepared for elected officials.
. Newspaper notices
. Preparation of Tax Bill insert to expand on the information provided in the
Provincially regulated disclosure notice (see below).
. Providing tax information on the internet web site
. Added training for taxation customer service staff.
Provincial Regulated Standard Disclosure Notice
Under Ontario Regulation 50/99, municipalities must send a disclosure notice to all taxpayers
affected by Bill 79 for the revised 1998 tax bills. No disclosure notice is required for the 1999 tax
bills. Schedule C is a sample Provincial Disclosure Jetter prepared by the Province which
attempts to explain the impact of Bill 79 on the property owner's 1998 taxes. Taxation staff
realize that communication is an important element for the successful introduction of Bill 79 tax
adjustments and will therefore, provide an additional, more user friendly and we believe, more
informative document.
Tax Bill Insert for Revised 1998 Billing
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The Town's draft tax bill insert (Schedule D) has been designed from the perspective of a
question and answer format in an attempt to anticipate the property owners general questions.
Report to Council FIN 19-99
Date: June 23, 1999
Subject: Revised 1998 Taxation Billing for Commercial,
Industrial & Multi-residential Properties
Page 5
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Bill 79 Speedbumos
One of the interesting issues regarding Bill 79 is who receives the tax credit or the clawback
when the property has been sold. Municipal legislation is silent on this issue. However, past
practice dictates that the property taxes are attached to the property and the obligation to pay the
tax rests with the current owner. Unfortunately, the disclosure notices which must accompany
the 1998 tax adjustments adds confusion to the tax liability issue. The name that appears on the
mandated disclosure notice is the one who originally was billed in 1998. Obviously, properties
have changed ownership since the time the roll was prepared. For a property owner who is
having a clawback, they may think that the obligation to pay the clawback amount is the
responsibility of the previous owner (who received the benefit of the original reduction) due to
the fact it is their name that appears on the disclosure notice. Taxation staff anticipate that there
may be difficulty collecting the taxes from this group.
1997 Frozen Assessment Role
The 1997 frozen assessment role is among the most important determinants of a ratepayer's tax
liability for 1998, 1999 and 2000. (The frozen assessment role is based on the assessment roll of
1997 and adjusted to reflect changes to the property such as additions, change in occupancy
status and deletions.) It is anticipated that many ratepayers will attempt to have their 1997 frozen
assessment altered. The Province has extended the deadline for appealing the 1997 frozen
assessment value used for the 1998 frozen assessment listing from February 1999 to February 29,
2000. Extending the appeal deadline may result in a several manually calculated revised tax
bills.
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In 1998, property owners had a deadline of November 1, 1998 to apply to have all or part of
their commercial or industrial property'coded as vacant for the upcoming 1999 tax year. To
qualify as vacant, the property had to be vacant for the three months of July, August and
September. The Province extended the vacant application deadline to February 28, 1999. The
1999 vacant commercial tax rate is 30% lower than the commercial occupied rate. There maybe
property owners who failed to make the application deadline and their property has been coded as
occupied for 1999. Finance staff anticipate that these property owners may not accept the realty
classification and may generate additional phone calls.
The Provincial OPT A program does not reflect supplementary assessments that are taxed for
only part of the year. These properties are reflected in the capping calculations the following
year when the assessment is on the roll for the entire year. An addition or a new property is an
example of a supplementary assessment not reflected in the OPT A database. For these
properties, manual tax calculations are required to calculate the 1997 frozen assessment value of
the property (even though the property did not exist in 1997) and then apply the appropriate
budgetary increase factor.
Son of Bill 79?
As membcrs of Council are aware, the taxation changes associated with Bill 79 ends on
December 31, 2000. On Janaury 1, 2001, the taxation structure would have the capped increase
property owner going from 20% to 100% in one year! Therefore, we expect that there will be a
new taxation bill (Son of Bill 79) introduced either next year or in 2001. (The residential phase-
in was completed over a three year period.) Finance staff will prepare a report and
corresponding By-Law to issue the 1999 FINAL taxes.
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Report to Council FIN 19-99
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Subject: Revised 1998 Taxation Billing for Commercial,
Industrial & Multi-residential Properties
Date: June 23,1999
Page 6
A IT ACHMENTS:
I. Schedule 13 - Tax Alert Letter.
2. Schedule C - Provincial Disclosure Notice.
3. Schedule D - Explanation Letter for 1998 Revised Tax Bill.
Prepared By:
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Stan Karwowski
Manager of Finfl11ce
TJQ:sk
Attachments
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Recommended for the consideration of
Pickering Town it
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Approved / Endorsed By:
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Gillis A. Paterson
Director of Finance & Treasurer
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THE CORPORATION OF THE TOWN OF PICKERING
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BY-LAW NO. 5527/99
Being a by-law to establish the revised 1998
taxation billing for the commercial, industrial and
multi-residential properties.
WHEREAS the Regional Municipality of Durham has passed By-law No. 9-99 to limit tax
reform related property tax increases to 10% in 1998, a further 5% in 1999 and a further 5% in
2000 for industrial, commercial and multi-residential properties in the Region of Durham as
provided for under Division B of Part XXII.2 of the Municipal Act.
WHEREAS the Regional Municipality of Durham has passed By-law No. 65-98 opting to have
the optional property classes consisting of the office building property class, shopping centre
property class and large industrial property class within the Region of Durham.
NOW THEREFORE THE COUNCIL OF THE CORPORA nON OF THE TOWN OF
PICKERING HEREBY ENACTS AS FOLLOWS:
1.
All assessment in any commercial class, any industrial class or in the multi-residential
class, shall have the revised tax levy for the year 1998 calculated as follows:
:fill".
Total tax rate X
applicable
in previous
year
assessed value
for the year on
the assessment
roll as most recently
revised for the taxation
year 1998
+ any adjustment made to increase or decrease taxes
under Division 8,of Part XXII,2 of the
Municipal Act
2. If the revised tax levy as calculated above creates a tax liability for the property owner,
the taxes owed shall be due in one installment on a date on August 27, 1999 or adjusted
by the Director of Finance/Treasurer.
3. If any section or portion of this By-law is found by a court of competent jurisdiction to be
invalid, it is the intent of Council for the Corporation of the Town of Pickering that all
remaining sections and portions of this By-law continue in force and effect.
4. Taxes shall be payable to the Treasurer, Town of Pickering.
5. This By-law comes into force on the date of its final passing.
BY -LA W read a first, second and third time and finally passed this
day of , 1999.
Wayne Arthurs, Mayor
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Schedule B
Tax Alert Letter
July X; 1999
Dear Property Owner:
Commercial, Industrial & Multi-Residential Property Tax Alert
This property tax alert is to notify you that you may be impacted by the
"clawback" provisions of Bill 79, the Provincial Government's Fairness for
Property Taxpayer Act. 1998. Town of Pickering staff are currently preparing
the REVISED tax bills for 1998. Our preliminary analysis indicates that you
may owe additional taxes for 1998 currently estimated in the amount of
$X,XXX.XX. This additional amount excludes penalties, late payment fee or any
currently outstanding balances in your account. .
The Province of Ontario introduced proper:t)' assessment tax reform in 1998. The
new property tax system established a common base from which the assessed
value of all properties is equitably measured. In addition, the Province
eliminated the Business Occupancy Tax (BOT). Many property owners in the'
industrial. commercial and multi-residential property classes experienced a wide
range of increases and decreases due to assessment changes and property tax
reform. To reduce these increases, the Province introduced Bill 79 to limit the
increases and clawback some of the decreases. Capping of the increases is to be
funded by withholding decreases within the same realty class. For example: a
portion of the industrial decreases are pooled together to pay for the industrial
capped increases.
. For 1998, property tax reform increases were capped at 10%. A further capping
of 5% has been legislated by the Province for 1999 and 2000. This will result in:~
a postponement of your property assessment tax reform savings until after the
year 2000.
Your co-operation and patience in understanding these complex changes being
legislated by the Provincial Government is appreciated. After you have received
your 1998 REVISED property tax bill. you are encouraged to contact the Town
of Pickering Tax office at (905) 420 4614 with any questions. We anticipate
our phone lines will be busy - your patience is appreciated.
For further information regarding Bill 79, please contact the Ontario Government
Ministry of Finance at 1-800-263-7965 or visit their website at
www.gov.on.ca/FINlhrnpage.html.
Sincerely yours,
Town of Pickering Taxation Office
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Schedule C
A TIACHMEi\'. ;; 1::._ TO REPORT #flt'LlC'\.t.jq
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Provincial Disclosure Notice
FORM 6 I
EXPLANATION OF 1998 PROPERTY TAXES
JJJNICIPALlTY
ASSESSMENT ROLL NO.
,
(\EGAL DESCRIPTION
PROPERTY CLASS
Commercial
1998 CURRENT VALUE ASSESSMENT
$68,280
~SESSED OWNER
RECALCULATED 1998 PROPERTY TAXES
Division B of Part XXII. 2 of the Fairness for Property Taxpayers Act
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The Fairness for Property Taxpayers Act, 1998 protects businesses from large tax reform-related property tax
'ilcreases. This new legislation prevents commercial, industrial and multi-residential properties from facing reform-
related tax increases of more than 10 per cent in 1998 and a further 5 per cent in each of 1999 and2000. Businesses
:who received tax decreases due to reform will see a portion of those decreases delayed. Any municipal tax changes
"eSUlting from decisions 01 local councils and the business education tax cut are applied on top of the amount of the
.\axes paid in 1997, as adjusted by the cap. .
This tax notice explains how this new legislation affects your 1998 property taxes. If you have questions, please
ronlact your municipal tax office.
8 TAXES PREVIOUSLY BILLED
.AMOUNT S 1,945
RECALCULATED 1998 PROPERTY AMOUNT $
TAXES
1997 Base Taxes' 1,408
Capping Adjustment 141
Education Tax Reduction -0
Municipal Tax Change 70
Recalculated 1998 Property Taxes 1,618
nl or Taxes levied lor 1998
.AMOUNT S 1,945
$a Tax
1.."lmenl
Recalculated
1998 Property
Taxes
1998 Taxes
Previously Billed
1997 base texes Include a.,997 business laxes
peid by (levied on) occupents of the property but
does not Include Business Improvement Area and
Locallmprovemfmt Charges.
$1,618
$1,945
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AMOUNTS
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f; An amounts have been rounded to nearest dollar.
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AnACHMENT#~ TOREPORT~'I
Schedule D
Explanation Letter for 1998 Revised Tax Bill
Understanding Your 1998 Revised Property Tax Bill
What is the Fairness for Property Taxpayers Act (Bill 79)?
On December 18, 1998. the Fairness for Property Taxpayers Act (Bill 79) was
passed to protect businesses in Ontario from large property tax increases. Bill
79 will limit the increases resulting from property tax reform on commercial.
industrial and multi-residential properties to 10% for 1998, 5% for 1999 and
another 5% for the year 2000.
In addition, Bill 79. allows the Town of Pickering and the Region of Durham to
add budgetary increases to the property tax bill. The budgetary increases for
1998 are mainly due to Provincial Downloading. Bill 79 also states that the Town
of Pickering can not issue the 1999 final tax bill until the 1998 revised tax bill
has been issued.
Why have your 1998 taxes been recalculated?
As required by Bill 79 - the Provincial government's Fairness for Property
Taxpayers Act, 1998, property tax reform increases for 1998 have been
"capped" at a maximum of 10% plus the 1998 budgetary increase approved by
the Region of Durham and the Town of Pickering.
What does this mean?
. Some property owners will pay less. Commercial, industrial and multi- .
residential taxpayers who experienced assessment reform related increase in
1998 will now receive a credit which will be applied to their 1999 FINAL TAX
BILL.
. Some property owners will pay more. Commercial, industrial and multi-
residential taxpayers who originally received a decrease in their 1998 taxes
will now see a portion of that decrease "CLAWED BACK" and will have to
pay an additional amount to help pay for those property taxpayers receiving
the capped increase.
What is the Provincial Notice?
The notice entitled "Explanation of 1998 Property Taxes - Form 5", was designed
and mandated by the Province of Ontario and is included with your tax bill. This
notice outlines the amount of the capping adjustment required. One notice is
supplied for each type of property class. If you have more than one class. the
sum total of all notices will equal the net 1998 capping adjustment shown on
your tax bill.
When willi receive the 1999 final tax bill?
The Town of Pickering expects to issue the 1999 final tax bill in September with
two installment dates being the end of October and November.
Are residential taxes affected by Bill 79?
No. These changes only affect commercial, industrial and multi-residential
properties. They will have no impact on taxes for residential properties or
residential condominiums.
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What happens after 2001?
Bill 79 only addresses the 1998, 1999 and 2000 tax years. T.
staff cannot speculate on the impact of Provincial property t2
2000. .
What is a multi-residential property?
Multi-residential properties are defined as properties with sev
units such as apartment buildings.
Additional Information
Ontario Ministry of Finance - Bill 79 News Release
"vww. goy .on.calF] N/enl.!1 ish/nrcsma12.htm
Government of Ontario - 1998 Legislation
INW'N. ontla. on. ca/Documents/documentsindex. htm
Questions?
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We appreciate your co-operation and patience in understanc
changes being legislated by the Provincial government. YOl
contact the Town of Pickering Tax Office at (905) 420 - 461
regarding the calculation of your REVISED 1998 tax bill. W
phone lines will be busy and your patience is also apprecia'
Town of Pickering Tax Office
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