Community Benefits Charges: Everything You Wanted to Know but Were Afraid to Ask
A primer on another fee in the alphabet soup of housing taxes
Highlights
Community benefit charges (CBCs) are a tax on new apartment construction, like development charges, used by some municipalities in Ontario.
CBCs are in addition to, not a replacement for, development charges. Therefore, new apartments assessed with CBCs are also required to pay development charges.
Because CBCs disincentivize building apartments and do not apply to lower-density forms of construction, they incentivize sprawl.
CBCs are also quite regressive, as families living in apartments have, on average, lower incomes and wealth than those who live in lower-density housing.
When it comes to the alphabet soup of Ontario municipal taxes on housing, development charges receive the most attention. However, we should not overlook the importance of community benefit charges (CBCs), which are a regressive, sprawl-inducing, and unnecessary form of taxation on apartment construction. CBCs share many of the same issues as DCs, such as gaming of infrastructure calculations and the use of funds for projects that are clearly not growth-related infrastructure.
What is a CBC?
A community benefits charge, or CBC, is essentially a tax on housing that only apartments are subject to, in addition to development charges (DCs). It is essential to note that no other form of housing incurs this additional tax.
If a municipality has a CBC, it typically applies to all new apartment developments that meet two conditions: They must have five or more storeys and 10 or more units.1
Unlike DCs, which are charged as a per-unit fee on housing, CBCs are charged as a percentage of the land value. Under provincial law, municipalities can set CBC rates up to a maximum of 4% of the total site value. Unlike the number of units, which is straightforward to calculate, disputes can arise between developers and the municipality over the appraisal value of a site, affecting the amount that the developer must pay.
Because CBCs are a function of land value, analyzing their impact is more challenging, as two 100-unit apartments in the same city can pay substantially different amounts depending on the underlying value of the land.
It also means that as land prices rise, new apartment construction becomes more expensive, further compounding affordability challenges. It also incentivizes building apartments on more remote, lower-cost pieces of land, such as land further away from multi-billion-dollar infrastructure investments like subways. CBCs, in essence, penalize what is supposed to be considered good planning outcomes by taxing them.
Like development charges, the purpose of CBCs is to pay for ‘growth-related infrastructure’ needed to support new apartments. However, when you look under the hood, both CBCs and DCs pay for amenities that should be funded by general taxation or can be paid in fairer, more efficient ways, such as having cars pay for parking lots instead of new homes.
CBCs are supposed to be about growth paying for growth
CBCs can be charged for any service that demonstrates an increase in need due to development or growth. However, unlike DCs, there is no prescribed list of services to which CBCs can be applied. Consequently, they can be applied to any service, including those already covered by DCs. Nevertheless, CBCs cannot fund the same specific project as DCs under the same service category. For example, both DCs and CBCs can be used for playgrounds; however, they cannot be used on the same project, such as the playground located at the corner of 123 Main Street.
Nevertheless, many projects that CBCs pay for seem to have a tenuous relationship to any increased need related to growth. As with DCs, any benefit to existing residents from CBC-funded infrastructure is supposed to be subtracted out; however, like with DCs, there can be significant gamesmanship around this.
CBCs are highly regressive
Despite its positive-sounding name, a community benefits charge is an exclusionary apartment tax, which does not apply to less dense forms of housing. Someone who lives in a one-bedroom apartment pays this tax through higher prices and rents, whereas someone building a 6,000-square-foot mansion does not.
CBCs induce sprawl
CBCs act as a density tax. If you take farmland, which has no housing on it, and permit a new low-rise neighbourhood on it, it is not assessed a CBC. If you take a triplex in a city and downgrade it into a single-family home, it is also not assessed a CBC, and neighbourhood density has been reduced. However, if a 6-storey, 12-unit apartment building is built in the same neighbourhood, it is assessed a tax. Furthermore, the amount of that tax is proportional to the land value, so taxes are higher in high-cost areas that could benefit the most from increased density.
CBCs should be more transparent
As with development charge (DC) by-laws, which require a DC background study before they can take effect, a CBC by-law requires a CBC strategy to be conducted first. Like DCs, a CBC strategy must include a capital works list, which is simply a list of all the infrastructure that a municipality is looking to use this funding source to pay for.
The CBC strategy provides transparency to the public on what money is being collected for before any planning applications are made. This requires staff to proactively determine what the city seeks to gain in community benefits before any application for new housing is submitted.
Municipalities are required to provide yearly reporting on how they utilize the funds collected under a Community Benefit Charge (CBC) bylaw. They must allocate or spend at least 60% of their CBC reserves each year. However, as with DCs, these annual statements are often not readily available.
CBCs are not always paid for in dollars, as they allow for in-kind contributions in lieu of cash. For instance, if the city agrees, a developer can offer a daycare in their proposed building in lieu of providing its cash equivalent value.
CBCs are growing in popularity
We found 23 municipalities2 with a CBC bylaw in effect as of March 2025. This includes many smaller urban areas, such as Grimsby, Halton Hills, Innisfil, and Fort Erie, as well as major cities like Toronto, Hamilton, Brampton, and Ottawa.
Of the 23 municipalities, 15 (61%) we identified brought their CBC by-laws into effect in 2022, the first year CBC by-laws were eligible to begin collecting this housing tax. The remaining nine municipalities brought their own into effect between 2023 and as recently as February 2025 (in the case of Ajax).
Several additional municipalities are either in the exploratory phase of adopting a CBC, such as Windsor, or have a completed draft CBC strategy but have not yet implemented it, like Caledon.
CBCs are unnecessary
CBCs are unnecessary, as they serve the same purpose as development charges. Any infrastructure that an apartment requires is already funded by development charges, rendering a second, parallel tax on apartment development unnecessary. The Mayor of Mississauga has proposed repealing their CBCs, as it is not necessary to have two taxes that accomplish the same thing.
While CBCs may not be the largest tax on new housing construction, they play a disproportionately large role in discouraging apartment construction.
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Both conditions must be met for a home to be subject to the tax.
Ajax, Barrie, Brampton, Burlington, Fort Erie, Grimsby, Halton Hills, Hamilton, Innisfail, Markham, Mississauga, Newmarket, Niagara Falls, Oakville, Oshawa, Ottawa, Pickering, Richmond Hill, St Catharines, Toronto, Vaughan, Waterloo, Whitchurch-Stouffville.