I don’t want to sound like sour grapes here, but there needs to be a better time to be asking a property owner for a once-a-year income and expense return.
I’ve written many times about how important it is for owners of commercial, industrial and multi-residential properties to ensure any information they submit to Ontario’s Municipal Property Assessment Corp. (MPAC) be as timely and accurate as possible.
This will, after all, have a direct impact on a property’s assessed value, what it could ultimately pay in property taxes, and help to ensure its tax bill is fair versus comparable properties in the same community.
Owners and MPAC need to work together to make the process convenient – the 2017 experience is not the way to go.
In the spring of last year, I wrote about MPAC’s user issues with its new online submission portal for submitting the Property Income and Expense Return (PIER).
It wasn’t just the technical problems, or the scenario where I would have to share my confidential login credentials with clients, the deadline was just bad timing – March 31. This is a time when many owners are otherwise preoccupied with their year-end financial audits.
Fast forward to this summer
The response dates are now July and August, but the new window is still hard to deal with. Summertime in Canada is when some or lots of people take holidays.
Our property management department received notification from MPAC on July 6 with a deadline of Aug. 8 – a month to comply. Property income and expense information for each property was to be submitted via online form through MPAC’s AboutMyProperty web portal.
Let me count the ways this is problematic.
Some translation is required: How income and expense information is recorded by the standard accounting systems used by most commercial property owners to produce reports doesn’t line up with the way MPAC’s online system requests the information. It takes some interpretation and massaging.
Not just anyone can complete these returns: This requires the expertise of individuals such as myself who can decipher lease and financial terms and an experienced administrator to complete the data entry – outside help from a temp agency won’t work. In my case, I made a cheat sheet staff used to make the job easier, but you still need more experienced people to complete the assignment.
It’s vacation season: Why do I reference a temp agency? Because this is summer vacation season. Odds are the people with the expertise to respond to such a request in a timely fashion won’t be in the office. This is also the height of construction season – property managers are at their busiest with building repairs that are hard or impossible to complete in winter.
MPAC’s own system can’t handle the volume: Because so many property owners were trying to access the system to meet deadline in such a short timeframe, AboutMyProperty was often overwhelmed. It took a member of our team days to be able to log into the system.
Penalties can apply: If you miss the deadline, you can be penalized – if information is not updated properly, the burden of proof in case of an appeal over a property’s assessed value shifts from MPAC to the property owner.
Changes that would make a big difference
Now, to MPAC’s credit, it did extend the deadline once it became apparent how many owners were finding it too difficult to get in under the wire. And we did find its customer service channels accessible, quick to respond and helpful.
But still, the major challenge is the compliance cost for owners as it is easy to appreciate the burden this kind of filing request can put on an owner. Independent owners in particular can find this confusing and costly. I spoke with a client who owns just one commercial property and he was very uncertain about what he had to do.
Odds are an independent owner will have to sit down with their accountant, or go find one, to get this done right. At my firm, we have a valuation department that can make all this make sense for the property management folks, but this isn’t the case for owners with one or a few commercial properties.
This information is important for MPAC to do its job, but the current process is too difficult and I’m certain that many owners will either not comply or submit any information, or wrong information, to meet the deadline.
To Whom It May Concern at MPAC, please consider the following:
* Always give 45-60 days to respond to this kind of request, or better yet, spread this over a six-to-nine-month period so owners can select the best reporting period for groups of their propertie;
* Avoid deadlines that conflict with the Canada Revenue Agency, summer vacation or other periods of big business disruption, like December. It’s been my experience that business cycles go from the week after New Years to May 24, people then zone out until Labour Day, get back at it from then to the end of November, then their minds go to mush for the next five weeks;
* And do your research to ensure as much consistency as possible between standard industry accounting software and AboutMyProperty. In the long term, there needs to be a matrix created so uploads can take place from standard accounting software directly into the MPAC data system – sort of like downloading into banking software directly from your bank.
Do this, and we can all get the paperwork in order without tearing our hair out.
To discuss this or any other valuation topic in the context of your property, please contact me at [email protected]. I am also interested in your feedback and suggestions for future articles.