What is the Managed Forest Tax Incentive Program?
Property owners that meet certain criteria can be eligible for a tax reduction on their property taxes based on their willingness and ability to participate in the Managed Forest Program. Essentially you become the steward of your own forest and as a reward for this you get a reduction in your property taxes.
Landowners who qualify for this program pay 25% of the municipal tax rate set for residential properties.
This program is governed by the Ministry of Natural Resources and Forestry and is 100% voluntary.
The MFTIP is a great opportunity to reduce your taxes while also helping the environment. However, there is quite a bit of commitment and effort that goes into maintaining and caring for your managed forest if you are approved.
Here is what you need to know.
What Criteria Do You Need to Meet?
1. Your Property Eligibility
Your property will need to be:
- 9.88 Acres or more of forested land on a single property (with one municipal roll number)
- Located in Ontario
- Have 400 trees per Acre; or
- Have 300 trees per Acre with the trees measuring more than 2 inches in diameter; or
- Have 200 trees per Acre with the trees measuring more than 5 inches in diameter; or
- Have 100 trees per Acres with the trees measuring more than 8 inches in dimeter
The MFTIP does have classifications on which trees are eligible for this program as well. These are tree species found in the book “Trees in Canada” by John Laird Farrar.
Any areas used for the residence, those that are landscaped and any other areas used for the enjoyment of the residence are not eligible for the MFTIP and will be deducted from the total acreage. For example, a property with a home on 50 acres may only have 49 acres of eligible area for the MFTIP, or less. This is a very simple example and other variables might come in to play here.
Areas used for recreation are typically not eligible either. Think golf courses and ski hills.
2. Your Own Eligibility
You will need to be:
- A permanent resident or citizen of Canada; or
- A Canadian corporation, partnership or trust; or
- Be a registered conservation authority or trust
Applying For the MFTIP
If all of the above sounds a little confusing, and if you’re not sure whether your property would qualify or not, not to worry. You will be required to come up with a plan and this plan will need to be approved by a designated Managed Forest Plan Approver. You can also hire one to help you with the plan.
Here are some brief steps:
1. Come up with a Managed Forest Plan
This plan will need to encompass your commitment to follow a 10-year plan that details how you will manage the forest. The plan still needs to have a long-term outlook of at least 20+ years.
If you’re unsure of where to start, you can look at the Guide to Stewardship Planning for Natural Areas.
All requirements are laid out in this Guide.
It is also important to note that you will have to submit a five-year progress report in the fifth year of your initial plan.
2. Have Your Plan Approved by A Managed Forest Plan Approver.
To see a list of the Ministry of Natural Resources and Forestry designated Approvers in your area, click here.
There is typically a fee for this but you will have to contact the Approver directly as these costs can vary.
Again, you can also hire a Forest Plan Approver to prepare the plan for you from scratch if you do not want to do it yourself.
The Approver will:
– Visit your property and confirm eligibility
– Ensure your plan meets the MFTIP standards
– Revise your plan if necessary
– If eligible, approve your plan and complete approval forms
If you are purchasing a home with an existing Managed Forest in place, the plan will not transfer to you. However, you could ask the homeowner to see their plan as a guide and reference.
3. Complete and Submit Your Application
We won’t go into the nitty-gritty here as you can read everything you need to know about the application in the Stewardship Guide.
But here are a couple of important things to note:
– The application deadline is June 30th of any given year.
– You’ll need to provide your most recent Notice of Property Assessment with your application
What Could Get Your Removed From The MFTIP?
Severing The Property.
If at any time, you decide to sever your property, you will automatically be removed from the MFTIP by MPAC. Even if your property does still meet eligibility requirements, you will need to submit a new plan and application package.
Selling The Property.
The MFTIP is applied to the owner of the property only. Therefore should you sell, your property will no longer be eligible for the MFTIP and be removed from the program by MPAC.
The new owner will need to apply on his / her own merit with a new plan and application package.
An existing owner can choose to share the existing plan they have but the Ministry of Natural Resources and Forestry will not share any plans without permission from the seller.
Not Following Good Forestry Practices.
You can read all about good forestry practices here.
This is where a large part of In short, you will need to be responsible for not only managing and maintaining your forest through thinning if needed, harvesting and re-planting but also for by protecting important ecosystems, wildlife and fish as well as the soil and any water that are found on your property.
The Ministry of Natural Resources and Forestry are is serious about this. Doing things like pasturing livestock on the designated managed forest, removing soil or incorrect harvesting (e.g. diameter limit cutting) are not permitted under this program.
Can I plant trees on my property to benefit from the MFTIP?
The short answer is yes, but of course, you will need to still follow the above criteria in order to qualify. This includes planting specific species of trees and having enough acres of forest.
Of course there is a cost to this so you will need to weigh the cost of tree planting to the tax savings you will receive under the MFTIP. It would be a good idea to contact your local Conservation Authority or a Managed Forest Plan Approver for advice on this.
Can I have buildings in the Managed Forest?
Unfortunately no. Any buildings or area used for residential purposes are deducted from the total area of the managed forest, even if there are trees on this area.
Typically a minimum of a one acre area is deducted from the total area of managed forest but again this is going to be property specific.
Here are some helpful places to start if you are interested in being part of the Managed Forest Tax Incentive Program.