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Ontario Court Rejects Property Tax Exemption Based on Hypothetical The Ontario Superior Court of Justice released its decision in London Jewish Community Village v The Municipal Property Assessment Corporation, Region 23 et al on November 5, 2020, which serves as an important reminder to charities and not-for-profits that they are generally subject to property taxes unless their property is specifically exempt. In this case, the court heard an application brought by the London Jewish Community Village (“the Village”) concerning the tax assessment of a portion of property that it owned. The Village is a not-for-profit corporation, with stated objects to provide housing and accommodation of senior citizens and/or low-income families, and to promote social services benefitting those individuals. The Village owns 3.33 acres of land in London on which a seniors’ apartment building and community centre were constructed in 1980. Subsequently in 2008, the Village constructed a separate building on its land, which was leased to a not-for-profit Hebrew day school co-operative (the “School”). The Village sought tax relief solely for the portion of its property occupied by the School pursuant to an exemption under paragraph 3(1)5 of the Assessment Act, which exempts from property tax “[l]and owned, used and occupied solely by a non-profit philanthropic, religious or educational seminary of learning or land leased and occupied by any of them if the land would be exempt from taxation if it was occupied by the owner. This paragraph applies only to buildings and up to 50 acres of land.” The Village argued that its land was only 3.33 acres in size, the space was “leased and occupied” by the School as a “non-profit philanthropic, religious or educational seminary of learning”, and the land would be exempt from taxation if it was occupied by the Village. In relation to its third argument, the Village’s position was that the land would be exempt if it was occupied by the owner pursuant to paragraph 3(1)5, relying indirectly on subparagraph 3(1)12(iii), which exempts from tax “[l]and owned, used and occupied by any charitable, non-profit philanthropic corporation organized for the relief of the poor if the corporation is supported in part by public funds.” In support of this, the Village argued that it is and would remain a charitable, non-profit philanthropic corporation; that, while it did not currently provide relief of the poor, it “could and would” own, use and occupy the space “for the relief of the poor”; and that it would be “supported in part by public funds.” The court, however, stated property tax exemptions should be based on current circumstances, rather than what could be. The court also stressed that, despite the good work provided by the Village, “it bears repeating that it was not the Legislature’s intention to grant tax exemptions to all worthwhile charitable institutions, however commendable their work might be.” Rather, the exemptions were limited, and the Village’s use of the property did not or would not in actuality have fallen within the enumerated exemptions – their intention to carry out relief of the poor was insufficient, even with these activities included in their incorporating documents. The court therefore dismissed the Village’s application for an exemption. This case is a helpful reminder to charities and not-for-profits that they will not be exempt from paying property taxes based solely on their status as a charity or not-for-profit. Rather, property taxes are levied based on their actual, and not hypothetical, use of the lands in question. Where lands are leased to a seminary of learning, the lands may be exempt from property tax as well, provided that the owner has objective evidence to demonstrate through its present circumstances that its hypothetical use of the lands would also result in an exemption. |
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