By now you’ve certainly heard that the Condo Authority of Ontario has set its new Assessment fee at $1/month per unit. This is only partially accurate. Not all units are subject to this new fee and not all units will end up paying the same amount. Here is why.
*The deadline to register your corporation and pay the assessment fee has been extended until February 28, 2018.
Condo Authority of Ontario
The CAO has been established under the amended Condo Act to improve condo living in Ontario by providing services and protections to condo owners. The CAO will provide easy-to-use information, mandatory training for directors and an online dispute resolution. It will also oversee the new Condo Authority Tribunal.
The Assessment fee
A new Assessment fee has been set to finance the CAO. Condo corporations will have to collect it from owners and pay it to the CAO. The CAO has also set the fees applicable to the various dispute resolution processes available under the Condo Authority Tribunal. We have blogged about this already.
Not all units will pay the same Assessment fee
You’ve certainly heard by now that this Assessment fee has been set at $1/month per unit. Well, this is only partially accurate. There is more to it.
First, not all units are going to be assessed. The fee is calculated on the basis of the number of voting units. Parking and locker units do not vote. As such, you don’t count them when calculating the fee your corporation will have to pay the CAO.
Second, in setting the Assessment Fee, the CAO could apply a different fee to different classes of corporations (standard vs vacant land, for instance) or different types of units (residential vs commercial). It could also set a different fee based on the number of units in a corporation or based on any other consideration that the authority considers appropriate. So far, the CAO has not done so and has set the Assessment fee at $1/month per voting unit, without further distinction.
Most importantly, pursuant to the Condo Act, this new Assessment fee shall form part of the corporation’s common expenses. As such, while the fee will be calculated on the basis of $1/month per voting unit, not all units will actually be paying $1. Some will be paying more and others will be paying less. It will all depend on each unit’s percentage of the common expenses. This percentage is found in your declaration’s schedules.
Let’s illustrate this with an example. Imagine a condo corporation with 100 units (again, I am not counting the parking or locker units). This corporation will have to pay to the CAO $1/month per voting unit. This means that the total annual Assessment fee for this corporation will be $1,200.
In this corporation, Owner #1 owns the Penthouse, a locker and 2 parking units. Let’s assume, in this example, that the total percentage of common expenses for which this owner is responsible is 2.4875%. This owner’s annual share towards the new Assessment fee is therefore $29.85 (or $2.49 per month).
Compare this with Owner #2 who owns a smaller unit, one locker and no parking unit. In this case, let’s assume that this owner’s total percentage share of common expenses is 0.7515%. This owner will therefore have to contribute the total annual amount of $9.02 (or $0.75 per month) towards the CAO’s fee.
This is really no breaking news. This is how corporations usually deal with all common expenses. They are divided between the owners on the basis of the established percentage of common expenses. So, when collecting this new fee, don’t necessarily add $1/month to each unit’s ledger. Instead, when you do your budget, add the total amount of the Assessment fee payable by the corporation. This could be a new line item. Then divide this responsibility between all owners as you do with the rest of your budget.
When is this fee due?
This new Assessment Fee is effective as of September 1st, 2017. The first payment is due no later than February 28, 2018. As part of its first instalment, every corporation will have to pay the required fees to cover the period from September 1, 2017 to March 31, 2018. This last sentence is important: while your payment is due by December 31, it will have to cover your fees until March 31, 2018. Using the same example as above, the corporation will have to pay $700 by February 28, 2018.
Prior to being able to pay this fee, you need to register your unit with the CAO. Once this is done, you will be able to pay this fee electronically by credit card, Interac or by sending in a cheque, certified cheque or money order to the CAO.
Read more on how to register your corporation with the CAO.