​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The general formula for property taxes in Ontario is tax rate multiplied by property assessment value. However, this formula can vary significantly for properties in the non-residential tax classes. The Province of Ontario protects commercial, industrial, and multi-residential properties from significant tax increases. The program limits or “caps” a maximum allowable increase at 10% of the previous year's CVA tax for the eligible property.

Effectively, capping protects landowners from paying the full amount of taxes based on the assessed value of the property as they are paying less tax than if they calculate their taxes using the general formula.

On the other side, when MPAC re-assesses all properties in Ontario, some commercial, industrial or multi-residential properties decline in value. Ordinarily, this decline would decrease property tax. However, the capping program uses a "clawback" to fund revenue shortfall resulting from lower assessment values by withholding some or all of the reduction to property owners.

Annually, staff from the local municipalities and the Region review and analyze the assessment/tax data to determine which properties are affected by capping and clawback and establish the clawback rates.