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Jeff Green | Aug 18, 2005

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Woodlot Association applauds rejuvenation of tax incentive programme

by Jeff Green

The Managed Forest Tax Incentive Programme, which was designed to encourage woodlot owners to practice sustainable forestry in 1995 but was weakened by tax code changes in 2002, has been strengthened once again.

As part of the Ontario Provincial Government’s Natural Spaces Initiative, properties that are part of the managed forests programme will be taxed in much the same manner as farms. This means the crop value of the land will be used to determine its value, as opposed to the sales value, which has been in use since 2002, and the tax rate will remain at the farmland rate of 25% of the residential rate.

This is welcome news to Chris Lincoln, the President of the Ontario Woodlot Association.

The “announcement is an important step towards creating a better MFTIP (Managed Forest Tax Incentive Program). One that will assist in creating a better property tax environment that will reward Ontario’s woodlot owners for their stewardship initiatives,” he said.

According to the Province, the changes will result in a tax decrease for 80% of the woodlot owners who participate in MFTIP. An assessment cap is being put in place as well, so the new system will not result in any increase in taxation for woodlot owners. At the other end of the scale, decreases in taxation will be capped as well. Taxes cannot be lowered more than 69%.

The Ontario Woodlot Association has been lobbying for changes ever since the program was weakened in 2002.

“We were involved in the steering committee that brought about the changes the government announced this month,” says Wade Knight, the Executive Director of the Association, “but it is gratifying when the arguments you make constantly to governments over a period of years finally make their way into policy.”

Two other changes in the program were announced as well. Managed plans, which must be funded by landowners in order to be eligible for the tax incentive programme, will now need to be completed once every 10 years, instead of every five years. This measure, which will bring a cost savings to landowners in the programme, is being taken in recognition of the kind of commitment that is involved in forest management.

“Forest management is a long-term commitment. Depending on the stage of development of a forest and the management objectives, changes to the forest during a five-year period may be minimal. Activities may or may not be required. In recognition of this and the upfront costs a landowner incurs in developing and improving a plan, the plan term is being extended to 10 years,” says a government press statement.

The other measure that is being taken is to increase the amount of open space that can be included in the plan. On eligible properties, forest openings or abandoned farm fields totalling up to 10% of the total eligible forest area, and swamps or beaver ponds totalling up to 25% of the forested area, can be included. This is being done in order to “recognise the diversity of forest landscape and to better promote land stewardship planning,” says a government release.

“All of these measures will enable the Woodlot Association and others to promote an expansion of the Managed Forest programme to woodlot owners, to the benefit the community at large,” concludes Wade Knight of the Ontario Woodlot Association.