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Ontario Tax - Assessment Act - Charity. Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corporation
In Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corporation (Ont CA, 2025) the Ontario Court of Appeal allowed an appeal involving municipal tax and the charities exemption [Religious Hospitallers], while overriding a precedent on the issue:[1] The focus of this appeal is whether this court’s decision in Religious Hospitallers of St. Joseph Housing Corp. v. Regional Assessment Commissioner (1998), 1998 CanLII 2943 (ON CA), 42 O.R. (3d) 532 (C.A.) should be overruled. That case interpreted s. 3(1)12 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) and limited the parameters for eligibility for an exemption from municipal tax for a charitable, non-profit philanthropic corporation.
[2] The appellant, Stamford Kiwanis Non-Profit Homes Inc., is a charitable, non-profit philanthropic corporation that works with Niagara Regional Housing, a regional service manager under the Housing Services Act, 2011, S.O. 2011, c. 6, Sched.1, to provide affordable housing to low-income residents of the City of Niagara Falls. The appellant appeals from its unsuccessful application under s. 46 of the Act for a declaration under s. 3(1)12(iii) of the Act that three properties it owns in the City of Niagara Falls are statutorily exempt from municipal taxation.
[3] Section 3(1)12(iii) provides that:3(1) All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:[1]
...
12. Land owned, used and occupied by,
i. The Canadian Red Cross Society,
ii. The St. John Ambulance Association, or
iii. any charitable, non-profit philanthropic corporation organized for the relief of the poor if the corporation is supported in part by public funds. ....
Religious Hospitallers
[14] Religious Hospitallers involved a corporation that converted a hospital purchased from the Order of the Religious Hospitallers of St. Joseph of Cornwall (the “Order”) into an apartment complex. The Order established the corporation. The corporation’s sole undertaking was ownership of the property which consisted of 59 residential apartment units used to accommodate senior citizens. Twenty percent of the occupants paid market rent and the remainder paid RGI. Capital funding was provided by a mortgage from the Order to the corporation. Operating income derived from rentals, parking and laundry charges. The Order was responsible for managing the complex and was paid an annual fee of $60,000 for those services. The provincial government, through the Ministry of Housing, would make up the shortfall between income and expenditures. In 1993, the Ministry paid $483,176 in that regard. This covered mortgage interest of $437,749, and the remainder represented property taxes and the management fee, amongst other things. Total expenditures in 1993 amounted to $664,296. Government subsidies paid for the financing of the purchase by the corporation from the Order.
[15] In 1996, the Divisional Court had ruled that the corporation was entitled to an exemption from municipal taxation. The Regional Assessment Commissioner and the corporation of the City of Cornwall were granted leave to appeal to this court which allowed the appeal.
[16] The language of the Assessment Act in issue in Religious Hospitallers is not identical to the Act in issue on this appeal; however, for our purposes, there was no material difference. McKinlay J.A. commenced her discussion by stating that the taxpayer had the onus of showing that it comes clearly within the exemption clause. She cited Commissioners for Special Purposes of Income Tax v. Pemsel, 1891 CanLII 21 (FOREP), [1891] A.C. 531, at p. 551, for the proposition that “[t]here is no purpose in a Taxing Act but to raise money and … every exemption throws an additional burden on the rest of the community”: at p. 534. She stated that the corporation was clearly an incorporated institution and that it would be a “charitable” one if it was organized for the relief of the poor. She stated that the narrow issue to decide was whether the institution was “organized for the relief of the poor”, or was a similar institution.[2] Three questions had to be answered: (i) were the corporate objects relevant or was it the actual operation of the corporation which should be considered; (ii) if the latter, was the corporation organized for the relief of the tenants; and (iii) did the evidence indicate that the tenants were poor?
[17] First, McKinlay J.A. concluded that the corporate objects of the corporation were of assistance but not conclusive. “It is the property for which exemption is claimed and its actual operation and administration which are of primary concern in determining whether the exemption criteria are met”: at p. 537.
[18] Second, she considered whether the institution was organized for the relief of the tenants. She determined that it was not. She read those words as meaning that it would be the institution itself, “by some form of endeavour” of the corporation, which would provide the relief involved. She observed that the corporation did very little. It did no fundraising; it did not manage the operation --- this was done by the Order in return for an annual fee; and the purchase of the property was fully financed by government funds. “From the outset, the actual operation and administration were organized so that the Housing Corporation has provided nothing which is for the relief of the tenants. The total cost is borne by a combination of the tenants themselves and government”: at p. 537. As such, the corporation was not “organized” for the relief of the tenants within the meaning of the exemption.
[19] Having reached that conclusion, she then commented on the portion of the exemption which states that the philanthropic corporation is to be “supported in part by public funds”. In this regard, she referred to the Supreme Court’s decision in Stouffville (Village) (Assessment Commissioner) v. Mennonite Home Assn. of York County, 1972 CanLII 9 (SCC), [1973] S.C.R. 189, where Spence J. appeared to limit the meaning of the words “public funds” to funds from a government source. She considered that given the nature and function of the institution that would be seeking exemption under the section, “supported by public funds” would mean that the organizations are supported by appeals to the public for funds to assist in their work. She thought it strange that a charitable institution relying in part on government funds for its operation could take advantage of the exemption but one providing all of its own funds through its members and appeals to the public could not.
[20] She stated that all the funds to operate the corporation in question came from the tenants and government sources and this compelled her to conclude that it was not the corporation that provided relief. She also observed that as the government made up any deficit of the corporation, the corporation had nothing to gain from an exemption. The only result of the applicant’s litigation would be that the burden of the shortfall would shift from the province to the municipality which was never a party to the arrangement in the first place.
[21] Lastly, she was not prepared to conclude that the Divisional Court had erred in finding that the tenants were poor although it was unnecessary to decide this issue given that the corporation had not satisfied the “organized for the relief of” requirement.
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Discussion
[43] The central issue on this appeal is whether the exception found in s. 3(1)12(iii) of the Act was available to the appellant. To repeat, the appellant urges this court to overrule Religious Hospitallers, adopt the test established by this court in Byron Optimist, and allow the appeal.
[44] In addressing this matter, I will first discuss whether Religious Hospitallers was wrongly decided. This will involve consideration of the appropriate approach to interpreting tax legislation such as the Act involved in this case and the statutory provision in issue in this appeal. I will then canvass the jurisprudence that has engaged with the interpretation or application of s. 3(1)12(iii), before discussing legislative intent and whether the approach adopted by Religious Hospitallers is vague and unworkable. Even if I conclude that the decision was wrongly decided, this does not automatically result in Religious Hospitallers being overruled. This is because stare decisis requires adherence to precedent even if this court disagrees with the underlying decision. If I decide that the case was wrongly decided, I must then engage in a weighing of the advantages and disadvantages associated with overturning the error encapsulated in that decision. Religious Hospitallers may be overruled only if the decision is considered to have been wrongly decided and the advantages of overruling it outweigh the disadvantages. Lastly, I will address the impact of that analysis on the appeal itself.
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[51] Notre-Dame involved the question of whether an institution devoted to low rental housing for elderly persons living under the poverty line could benefit from the tax exemption available under Quebec municipal tax legislation. This decision was released four years before Religious Hospitallers. In Notre-Dame, the Supreme Court described the evolution of the law on the interpretation of tax legislation in Canada. The purpose of tax legislation was no longer simply to raise funds to cover government expenditure but was also used for social and economic purposes: at pp. 15-16. Writing for the court, Gonthier J. cited Stubart Investments Ltd. v. The Queen, 1984 CanLII 20 (SCC), [1984] 1 S.C.R. 536 and Golden v. The Queen, 1986 CanLII 50 (SCC), [1986] 1 S.C.R. 209 in support of this principle.
[52] In Ottawa Salus Corp. v. Municipal Property Assessment Corp. (2004), 2004 CanLII 14620 (ON CA), 69 O.R. (3d) 417 (C.A.), this court followed the approach described in Notre-Dame in the context of an appeal under s. 3(1)12 of the Assessment Act, noting that a general policy of raising funds could be subject to an additional policy of exempting social works: at p. 421, quoting Golden, at p. 18. The issue in the case was the interpretation to be given to “land owned, used and occupied by” found in s. 3(1)(12)(iii) of the Act.
[53] In that case, MacPherson J.A. wrote at p. 424 that the general purpose of the Act was to impose a property tax so that the Government could meet its expenditures. The purpose of the then 29 exemptions found in s. 3(1) was to allow specified types of organizations to spend more of their limited resources on attendant activities. In particular, the purpose of s. 3(1)12(iii), the clause at issue in this appeal, was to grant relief from property taxation to non-profit corporations “organized for the relief of the poor”. The public interest in granting those organizations additional resources to relieve poverty outweighed the public interest in generating revenue through taxation of property. In light of the purpose, this court in Salus interpreted the word “occupied” generously and as not requiring actual or exclusive occupation by the charitable institution. Direct use of the property by the charity in furtherance of its objective of relieving the poor was sufficient.
[54] Turning to the legislation in issue on this appeal, of course “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at p. 41, quoting Elmer A. Driedger, The Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983), at p. 87; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.
[55] The general purpose of the Act is evident from s. 3. All real property in Ontario is liable to assessment and taxation. This component of the Act clearly reflects a purpose of raising funds to cover government expenditures. Section 3(1) goes on to delineate exceptions to that objective. This includes subsection 12 which is in issue on this appeal and is entitled “Charitable Institutions”. Under s. 3(1)12(iii), (a) the land must be “owned, used and occupied by” a “charitable, non-profit philanthropic corporation”, (b) the corporation must be “organized for the relief of the poor”, and (c) the corporation must in part be supported by “public funds”.
[56] When the general purpose described in s. 3 of the Act is juxtaposed with the purpose encapsulated in the exception in s. 3(1)12(iii), clearly the Legislature has opted to grant tax relief to those corporations who meet the parameters of the subsection. The legislative purpose behind the exemption is to allocate funds otherwise destined to defray government expenditures to alleviate the tax burden of charitable, non-profit philanthropic corporations that are relieving poverty thereby enabling their charitable, non-profit or philanthropic use of funds.
[57] In the appeal before this court, the application judge was of the view that the Religious Hospitallers must be taken to have contemplated the dual-purpose interpretation principles described in Notre-Dame. Moreover, he thought that McKinley J.A.’s comments were made in the context of who bore the burden of proof. In the Divisional Court, all three judges acknowledged that the Court of Appeal in Religious Hospitallers did not refer to Notre-Dame which had been decided four years earlier but disagreed on whether the court had considered the dual-purpose approach to interpretation of taxing statutes established in Notre-Dame.
[58] Certainly, Religious Hospitallers neither referred to Notre-Dame nor mentioned the dual-purpose approach adopted by the Supreme Court in that and its earlier decisions. While it is the case that McKinlay J.A. started by discussing onus, she went on to quote from the 1891 Pemsel decision from the U.K. on the sole purpose of a Taxing Act being to raise money. If she were applying a dual-purpose approach, it seems strange that she would include in her reasons an express quote from Pemsel, “[t]here is no purpose in a Taxing Act but to raise money”. I am compelled to conclude that a dual-purpose interpretation as mandated by the Supreme Court was not applied in Religious Hospitallers. The single-purpose approach in Pemsel would not have been quoted if the interpretation was being examined through more than a single-purpose lens. Furthermore, a more generous interpretation as in Salus would have placed weight on the social purpose embedded in the legislation. The statutory provision providing for an exemption had a dual purpose: to raise revenue and to advance the social benefit of assisting the poor. Undoubtedly the panel in Religious Hospitallers would be aware of the dual purpose but the failure to focus on the two purposes would limit the ambit of the inquiry. Recognition of a dual purpose would inform whether the limiting requirement of an endeavour was in keeping with the purpose of the provision.
[59] I would also note that the companion case of Religious Hospitallers of St. Joseph of Cornwall Corp. v. Regional Assessment Commissioner (1998), 42 O.R. (3d) 539 (C.A.) decided at the same time as Religious Hospitallers also made no reference to the Supreme Court’s dual-purpose interpretive approach.
[60] That said, the lens through which Religious Hospitallers examined the Act is not determinative of the issue on this appeal. One must also ascertain whether there were other shortcomings in the Religious Hospitallers analysis or result that address whether it was correctly or wrongly decided.
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[70] The language of the subsection engaged by this appeal involves the words “organized for the relief of the poor if the corporation is supported in part by public funds”. The interpretation to be given to the public funds component is dictated by the reasoning of the Supreme Court in Mennonite Home and refers to government funding. This leaves the interpretation to be given to the “organized for the relief of the poor” component of s.3(1)12(iii) read in the context of the provision and the Act as a whole. The requirement of “some other endeavour” imported by Religious Hospitallers is not, and never has been, found in the wording or apparent purpose of the Act. Moreover, while not determinative, Angus Stevenson and Lesley Brown, eds, Shorter Oxford English Dictionary, 2nd ed. (New York: Oxford University Press, 2007) defines “organized” as: “Formed into a whole with interdependent parts; coordinated so as to form an orderly structure; systematically arranged.” This too does not imply any endeavour requirement.
[71] The part of s. 3(1)12(iii) at issue, “organized for the relief of the poor”, was introduced in 1946 by Bill 146, An Act to Amend the Assessment Act, 2nd Sess., 22nd Leg., Ontario (assented to 5 April 1946). Neither it nor its predecessor sheds any light on the interpretation to be given to the subsection. The legislative debates are silent on the subject. There is no suggestion of any endeavour requirement.
[72] The objects of the applicant in Religious Hospitallers disclosed that it contributed to the social purpose of relieving poverty. The facts of the case established that it operated to offer affordable housing to those in need — in essence to relieve poverty. Indeed, this is all that it did. These characteristics reflected the legislative intent of the legislation and support the argument that Religious Hospitallers was wrongly decided.
(iv) Vague and Unworkable
[73] Fourth, the appellant argues that the “endeavour” requirement is vague and hence unworkable. This is another basis identified by the Supreme Court in Kirkpatrick on which to overrule precedent. There, at para. 207, the court described an unworkable precedent as one that is unduly complex or difficult to practise. As Schabas J. stated at para. 97 of his concurring reasons in the Divisional Court:The vague requirement of “some form of endeavour” found in Religious Hospitallers leaves one wondering where the line is to be drawn, or why it must be drawn. If private sources of funding are required, as suggested by Religious Hospitallers, how much funding? If the housing corporation directly manages the building with its own employees, or volunteers, as appears to have been the case in MacKay Homes, rather than hiring a management company, is that an “endeavour” sufficient to gain the exemption? Religious Hospitallers provides no assistance, simply observing how “little” the corporation did in that case. [74] In the decision under appeal, the majority and the concurring reasons disagreed on whether Religious Hospitallers should be read as interpreting endeavour as imposing a requirement that the institution seek or obtain private funding: see paras. 73, 86. In itself, this disagreement reflects the uncertainty and unworkability associated with the introduction of an endeavour requirement.
[75] All of the aforementioned four factors identify the shortcomings of Religious Hospitallers. For these reasons, I conclude that Religious Hospitallers was wrongly decided. However, having made that determination, I must still decide whether the decision should be overruled. This engages a weighing of the advantages and disadvantages of correcting the error reflected in that precedent.
(b) The Weighing Exercise
[76] The appellant submits that Religious Hospitallers is an anomaly and an outlier in Ontario jurisprudence. As such, it rests on an unstable foundation that does not serve the interests of certainty and predictability. The appellant further submits that people have not governed their behaviour based on its holdings. Indeed, it states that the within appeal represents the first substantive application of Religious Hospitallers.
[77] The respondents assert that Religious Hospitallers should not be overruled. They advance certain advantages associated with upholding the decision. Apart from certainty and consistency in the law that arises from adherence to Religious Hospitallers, they maintain that a tax exemption for the appellant would result in a disentitlement of any tenants who may receive property tax credits under the Taxation Act, 2007, S.O. 2007, c. 11, Sched. A. The respondents argue that while a property tax exemption would reduce the appellant’s operating expenses and increase its net operating revenue, it would also serve to reduce the actual income of the tenants due to the operation of the tax credit regime. In addition, the respondents argue that the exemption would simply shift the financial burden from Niagara Regional Housing to the City.
(i) Unstable Foundation
[78] In Fernandes v. Araujo, 2015 ONCA 571, 127 O.R. (3d) 115, at para. 47, this court stated that “decisions that rest on an unstable foundation tend to undermine the very values of certainty and predictability that stare decisis is meant to foster.” The endeavour requirement was created by Religious Hospitallers divorced from any such requirement in the legislation. Moreover, cases have not tended to treat the decision as authoritative. As the application judge in this case stated at para. 57 of his reasons, “None of the other authorities drawn to this court’s attention put so as (sic) fine a point on ‘organized for the relief of the poor’ as Religious Hospitallers.” As noted by the appellant, very few cases have followed this aspect of Religious Hospitallers. Importantly, the decision has also never been affirmed by this court. It has only been cited once by this court but that was on the issue of public funds in Causeway Foundation v. Ontario Property Assessment Corp., Region No. 3 (2004), 2004 CanLII 8242 (ON CA), 235 D.L.R. (4th) 754 (Ont. C.A.), at p. 760 (“Causeway (C.A.)”).
[79] Mackay Homes v. North Bay (City) (2005), 6 M.P.L.R. (4th) 44 (Ont. S.C.) involved an applicant that was designed to be entirely charitable in nature and that provided low-cost rental housing for the assistance of the elderly. The application judge did not expressly mention Religious Hospitallers but in considering whether the applicant was organized for the relief of the poor, stated that this required that the applicant undertake some form of endeavour to provide the relief. In addition, presumably drawing on Byron Optimist, there had to be an element of economic deprivation or need, the relief from which was part of the purpose of the institution claiming the exemption. The objects of the institution were, among others, to acquire land on which to construct low-cost rental housing on a non-profit basis at or below rents specified by CMHC. The applicant owned and operated the rental units. The project was financed and continued to be financed by the government. The directors of the institution served without fee or involvement of any kind. The application judge did not expressly address the endeavour requirement. He was satisfied that the applicant was a charitable non-profit philanthropic corporation organized for the relief of the poor and supported in part by public funds. As such, it was entitled to an exemption from taxation under the Act.
[80] St. Catherines Seniors Apartments Phase Three Inc. v. Municipal Property Assessment Corporation, 2015 ONSC 3896, 41 M.P.L.R. (5th) 98 also dealt with the ownership and operation of an apartment building for low-income seniors. The only contested issue in that case was whether the “poor” requirement of s. 3(1)12(iii) had been met. Notre-Dame, Ottawa Salus, Mennonite Home and Byron Optimist were all relied upon by the application judge but no mention was made of Religious Hospitallers. This may have been because the parties had agreed that the only disputed issue was the ambit of the “poor” requirement. The exemption was granted.
[81] As noted by the appellant, the requirement of an “endeavour” from Religious Hospitallers has never been affirmed by this court and where the decision is cited, it is for other reasons such as the meaning to be attributed to public funds, the burden of proof, or corporate objects not being determinative: see e.g. Causeway (C.A.); London Jewish Community Village v. The Municipal Property Assessment Corporation, Region 23 et al., 2020 ONSC 6794, at para. 19g; Causeway Foundation v. Ontario Property Assessment Corp., Region No. 3, 2002 CarswellOnt 2064 (S.C.), at para. 65. Based on the authorities provided by the parties, until the case under appeal, Religious Hospitallers had never been applied to deny an exemption where all parties had agreed that the charity was serving the poor.
[82] More recently in The Chelsea Green Home Society v. MPAC, et al. (1 August 2023), London, CV-16-00003013 (Ont. S.C.), the issue before the court was whether the applicant for exemption and the subject properties were “organized for the relief of the poor”. MPAC, who opposed the application, relied on Religious Hospitallers and the application judge’s decision in this appeal. The applicant, Chelsea Green, did no fundraising and had retained a third party to perform property management.
[83] Grace J. stated that he was unsettled by the approach Religious Hospitallers mandated. He too noted that Religious Hospitallers made no mention of Notre-Dame and had applied a narrow interpretation of the Act. He endorsed the views of the application judge in the case under appeal on the shortcomings of Religious Hospitallers and observed at para. 30:Chelsea Green’s submission that the statutory exemption was read narrowly in Hospitallers has merit. Years earlier, the Supreme Court of Canada [in Notre-Dame] had rejected the argument that the exemptions in taxation statutes should be strictly interpreted. Hospitallers makes no mention of that decision. [84] Left to his own devices, Grace J. would have focused on the stated objects of the applicant and whether its operations entailed offering affordable accommodation to those in financial need. He would not have considered the absence of fundraising and the retention of a professional property manager to be factors. However, in light of Religious Hospitallers and the similarity with the case under appeal, he felt compelled to dismiss the application.
[85] Lastly, again as mentioned, Schabas J. in the case under appeal concurred in the result but stated that it was driven by “an unsatisfactory state of the law” compelled by Religious Hospitallers.
[86] A review of the jurisprudence on s. 3(1)12(iii) supports the conclusion that Religious Hospitallers has largely been ignored as an authority for about 25 years, and the soundness of its holding has been questioned by lower courts. The interpretation reached and its evident impact detract from the purpose encapsulated in the exemption provision. The objective is humanitarian in nature: to aid charitable, non-profit philanthropic corporations organized for — or put differently, aimed at — the relief of the poor. Religious Hospitallers impedes this objective through the introduction of a requirement divorced from both the text of the statute and its purpose. It is better to correct the error now with a view to providing clarity and consistency in the law.
(ii) Applicable Test
[87] The test that has been adopted by many decisions is that articulated in Byron Optimist, at p. 11: “there must be an element of economic deprivation or need, the relief from which is a part of the purpose of the institution claiming the exemption.” An applicant for an exemption must establish that it falls within the four corners of the exemption provision. This does not include “some form of endeavour”. Recognition must be given to an interpretation of the Act that is mindful of its dual purposes. As stated by MacPherson J.A. in Salus, at p. 424, “while there is a substantial public interest in the generation of revenue through the taxation of real property, in the context of real property covered by these exemptions, that public interest is outweighed by the public interest in giving relief from property taxation to certain organizations.”
[88] In Canadian Centre for Torture Victims (Toronto) Inc. v. Regional Assessment Commissioner, Region No. 9 (1998), 1998 CanLII 14626 (ON SC), 36 O.R. (3d) 743 (Gen. Div.), the late Lax J. conducted a detailed review of the jurisprudence to determine whether the relief of poverty as part of the institutional purpose was sufficient or whether the institution claiming the exemption must have relieving poverty as its controlling or predominant purpose. She concluded that Byron Optimist represented the governing test and therefore a part purpose sufficed. In the case under appeal, it matters not as the entire purpose of the appellant is to relieve poverty.
[89] That said, an applicant would still have to establish that the primary use of the property for which the exemption is sought is to pursue relief of poverty. This is required by the “primary purpose” test set out in Buenavista on the Rideau v. Ontario Regional Assessment Commissioner, Region No. 2 (1996), 1996 CanLII 11792 (ON SC), 28 O.R. (3d) 272 (Div. Ct.), at p. 276. As summarized in The Diocese of Toronto Camps (Anglican Church of Canada) v. Municipal Property Assessment Corp. (2004), 2004 CanLII 34918 (ON CA), 246 D.L.R. (4th) 170 (Ont. C.A.), at p. 174, this test requires “an objective determination of the principal purpose for which the land is used and occupied.” See also Fung Loy Kok Institute of Taoism v. Municipal Property Assessment Corporation, 2024 ONCA 415, 171 O.R. (3d) 743, at paras. 34-35. This helps address the mischief associated with an applicant whose institutional pursuit satisfies the part purpose test of Byron Optimist but who primarily uses the property in question for purposes unrelated to the relief of poverty. In other words, the Byron Optimist test and the primary purpose test complement each other in preserving revenue generation through property taxes while enabling the social purpose embodied in the exemption.
(iii) Financial Burden of an Exemption
[90] As mentioned, the respondents argue that the exemption found in s. 3(1)12(iii) shifts the financial burden from the province to the City. The burden of any exemption will by its nature fall on a municipality. This is not a basis on which to refuse to grant an exemption to a deserving applicant. Entitlement to an exemption should not depend on jurisdictional responsibility.
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Decision under Appeal
[94] Turning to the case under appeal, to qualify for an exemption under s. 3(1)12(iii) of the Act, an applicant must:(i) own, use and occupy the land;
(ii) be a charitable, non-profit philanthropic corporation;
(iii) be organized for the relief of the poor. This means (a) the primary purpose or use of the subject property is relief of the poor, and (b) the corporation operates at least in part for the relief of the poor. The corporate objects may inform (a) and (b) but are not determinative. There must be an element of economic deprivation or need on the part of the corporation’s intended beneficiaries; and
(iv) the applicant must be supported in part by public funds. [95] As mentioned, it was conceded by the respondents that the appellant met all the requirements of s. 3(1)12(iii) subject to resolution of the meaning to be given to whether the appellant was “organized for the relief of the poor”. There is no issue that this charitable, non-profit philanthropic organization is organized for and is in fact serving the poor. Since its inception, the appellant’s only activity has been providing affordable housing to low-income residents of Niagara Falls. To fulfill that purpose, it located and acquired the properties, and built, owns, uses and occupies its three apartment buildings. It directs and advises the property manager with whom it has contracted to manage the day-to-day operations at the properties. It has financial commitments and seeks grants and funding for renovations and repairs. It earns modest investment income. There is no need for any separate endeavour or evidence of private fundraising. The application judge made a finding that the tenants are poor and that the appellant serves the poor as intended by the legislation. Unquestionably, there is an element of economic deprivation or need, the relief from which is a part of the purpose of the appellant. Its activities have been funded in part by the government. It is the appellant who carries the ultimate responsibility for the undertaking. It meets the requirements of s. 3(1)12(iii) and fulfills the legislative purpose of providing relief to the poor. This interpretation supports, rather than detracts from, the laudable objective captured in the statutory provision. To quote Schabas J. in his concurring reasons in the Divisional Court at para. 89:Here, the applicant acquired and owns the properties. The corporation’s Board meets monthly to ensure that its objective of providing affordable housing is achieved through the provision of approximately 100 housing units. It contracts with a private company to manage its operations and ensures that the private company complies with its contractual obligations. The Board provides advice and direction to the manager. It has financial commitments including mortgages and loans from the private sector. It seeks grants and funding for renovations and repairs, taking on long-term commitments to own, operate and maintain the properties. It earns some modest investment income. The funding for all of these obligations comes from public coffers and from rent, but the corporate applicant is the entity which is ultimately responsible for the enterprise, and it does nothing else. It is difficult to see, therefore, how it is not “organized” for the relief of the poor. . Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corp.
In Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corp. (Div Court, 2023) the Divisional Court considered (and dismissed) an appeal by a non-profit housing provider of a dismissal of a Superior Court declaration application [under Assessment Act, s.46] that they were property-tax exempt as a charity.
In these quotes the court sets out statutory provisions governing this issue:[3] The appellant argues that the application judge erred in accepting the joint position of the City and the respondent Municipal Property Assessment Corporation (“MPAC”) that the appellant does not qualify for a municipal tax exemption available to certain charitable institutions: see Assessment Act, R.S.O. 1990, c. A.31, s. 3(1)12(iii). In reaching that conclusion, the application judge found, among other things, that the appellant was not “organized for the relief of the poor”, as those words have been interpreted in previous case law.
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[5] The appellant Stamford Kiwanis Non-Profit Homes Inc. (“Stamford Homes”) is a non-for-profit corporation incorporated in 1984. As stated in its letters patent, Stamford Homes’ corporate objects include the following:a. to acquire, construct, hold, supply, operate, manage and maintain housing accommodations and incidental facilities for the purpose of operating a non-profit housing project for lower income people, senior citizens, functionally handicapped person or others with special needs; and
b. to raise money through subscriptions, memberships. ....
III. Decision under appeal
[11] In November 2021, Stamford Homes brought an application to the Superior Court under s. 46 of the Assessment Act. It sought a declaration that commencing with the 2021 taxation year, the Properties were exempt from municipal taxation pursuant to s. 3(1)12(iii) of that Act. In prior years, Stamford Homes was assessed and paid municipal taxes relating to the Properties.
[12] The introductory language of s. 3(1) of the Assessment Act provides as follows:Property assessable and taxable, exemptions
3(1) All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation: ... [13] The remainder of s. 3(1) consists of a total of 42 clauses (ss. 3(1)1 to 3(1)29) setting out taxation exemptions available to specified types of institutions and organizations. The Court of Appeal for Ontario has recognized that many of such organizations “perform activities which are of great benefit to either discrete groups of disadvantaged persons or to society as a whole. Exemption from property tax allows these organizations to spend more of their limited resources on those activities”, consistent with the organizations’ social and economic purposes: see Ottawa Salus Corp. v. Municipal Property Assessment Corp. (2004), 2004 CanLII 14620 (ON CA), 69 O.R. (3d) 417 (C.A.), at para. 26.
[14] Land exempt from municipal land tax includes property held by charitable institutions specified in s. 3(1)12, which provides as follows:Charitable institutions
12. Land owned, used and occupied by,
i. The Canadian Red Cross Society,
ii. The St. John Ambulance Association, or
iii. any charitable, non-profit philanthropic corporation organized for the relief of the poor if the corporation is supported in part by public funds.
[Emphasis added.] [15] Some of the cases that the parties cite in their submissions were decided prior to the 1998 amendments to the Assessment Act. Prior to those amendments, s. 3(1)12 provided as follows:12. Land of an incorporated charitable institution organized for the relief of the poor, The Canadian Red Cross Society, St. John Ambulance Association, or any similar incorporated institution conducted on philanthropic principles and not for the purpose of profit or gain, that is supported, in part at least, by public funds, but only when the land is owned by the institution and occupied and used for the purposes of the institution. [Emphasis added.]
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