Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 07, 2016

FILE NO.: WR 140797

Assessed Person(s): A.M. and M.G.

Applicant(s): A.M. and M.G.

Respondent(s): City of Toronto

Property Location(s): Withheld

Municipality(ies): City of Toronto

Roll Number(s): Withheld

Application Number(s): 3135633

Taxation Year(s): 2015

Hearing Event No.: 622437

Legislative Authority: Section 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A

Heard: April 22, 2016 in Toronto, Ontario

APPEARANCES:

Parties

Counsel+/Representative

A.M.

M. G.

M.G.

Self-represented

City of Toronto

Georgia Tanner+

DECISION OF THE BOARD DELIVERED BY M. SHARMA

INTRODUCTION

1A.M. (the “Applicant”) filed an application with the City of Toronto (the “City”) seeking a cancellation or reduction of property taxes for the taxation year 2015.

2The Applicant advised the City that she is unable to meet her tax obligations because of sickness and extreme poverty.

3The Applicant is seeking a reduction, cancellation or refund of taxes under s. 323(1) (e) of the City of Toronto Act, 2006 (“Act”) because of her inability to pay the taxes for the year 2015 due to sickness and/or extreme poverty.

4In this hearing, the Applicant is being represented by her daughter M.G.

ISSUE

5The issue before the Assessment Review Board (“Board”) is to determine whether the Applicant’s property taxes for the taxation year 2015 should be cancelled, reduced or refunded because of the Applicant’s inability to pay due to sickness or extreme poverty.

DECISION

6The Board finds that based on the evidence before it, the Applicant failed to demonstrate to the satisfaction of the Board, that there existed an inability to meet her property tax obligations for the taxation year 2015.

7The Board, accordingly, denies the application for the cancellation, reduction or refund of taxes for the taxation year 2015 on the property.

BACKGROUND

8Section 323(1) (e) of the Act states:

Cancellation, reduction, refund of taxes

323. (1) Upon application to the city treasurer made in accordance with this section, the City may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(e) the applicant is unable to pay taxes because of sickness or extreme poverty;

9In order to satisfy the conditions set out above, two tests are applied. The first test is that the Board must determine if sickness or extreme poverty exists. If neither condition exists, then the application fails. The second test is that if either condition is present, the Applicant must demonstrate to the satisfaction of the Board an inability to pay some or all of the taxes.

APPLICANT’S EVIDENCE

10The representative for the Applicant submitted medical reports from her doctors which substantiated her claim that due to her sickness she is unable to work.

11The representative for the Applicant also submitted a copy of letter from the Ontario Ministry of Community and Social Services which confirms she is the recipient of income support under the Ontario Disability Support Program. The letter also confirms that the amount of monies received in the tax year 2015 was $8,949.40.

12The representative for the Applicant stated that there were several issues that have adversely affected her ability to meet her property tax obligations in 2015 as follows:

a. That due to poor insulation the cost of heating her home is extremely high and accounts for over four hundred and fifty dollars ($450) of her monthly household expenditures.

b. That because of mold problems and other building issues the basement area was condemned and could not be occupied or used.

c. That in order to obtain income to assist with her expenses, the Applicant had in the past, rented the basement and has now lost that source of income because of the mold and other building issues. In addition, the representative indicated that an earlier tenant had taken Applicant to the Rental Tribunal on account of the mold issue and the tenant was awarded three (3) month’s rent which only served to further aggravate her financial situation.

d. That the home is in a state of disrepair and indicated that a significant amount of monies was expended in an attempt to rectify these issues including upgrading the insulation. The representative further stated that the company that was paid to undertake the work absconded with the Applicant’s money and did not complete the work. A copy of an Affidavit of Enforcement was submitted which showed that Applicant had obtained a judgement against the company in the amount of $13,990.67 (including pre and post judgement interest) for failing to complete the work.

e. That under the circumstances, the Applicant had to incur credit card charges for various expenses, which over time had accumulated to fairly substantial sums. This additional debt further added to her expenditures and affected her ability to pay the taxes. The representative who is the daughter of the Applicant (A.M.) informed the Board that she had to intervene and make payments on behalf of her mother and now has the credit card expenses under control.

13The representative for the Applicant submitted a copy of the Form 1 – Financial Information which shows Applicant’s monthly income and expenses as detailed hereunder:

Income:

a. Ontario Disability Support $ 745.78

b. Old Age Security $1,413.00

c. Rent $ 450.00

Total: $2, 608.78

Expenses:

d. Mortgage $1,266.00

e. Property Taxes $ 324.00

f. Water $ 200.00

g. Hydro $ 281.00

h. Heating $ 178.00

i. Telephone $ 75.00

j. Groceries $ 300.00

k. Credit Card $ 35.00

l. Miscellaneous $ 60.00

Total: $2,719.00

14The representative for the Applicant stated that the only asset the Applicant has is the property in question and evidence presented showed that the assessed value of the subject property stood at $552,000 (rounded) in 2015.

15The representative for the Applicant indicated that she has become actively involved with the financial situation facing her mother and is taking steps to bring her finances in order. For example the representative indicated that she paid the sum of $2,000 on her mother’s credit card bill in 2015 to bring down the debt. The representative also provided evidence that she has been exploring other areas of potential assistance such as the Home Energy Loan Program, Enbridge Gas rebates program and IESO rebates program; and further indicated that it is her intention to move into the premises with her mother and grand-mother to be able to assist with the overall management of the expenses, to undertake repairs to make the living conditions on the premises livable and to lower the overall expenditures so that she will be able to have the property taxes paid on a current basis.

16On behalf of her mother, the representative asked the Board to consider her request for relief of taxes based on the circumstances that made it impossible for her to meet her tax obligations in 2015, and to take into account the steps she has already taken and her plans for resolving and preventing a reoccurrence of the situation in the future. The representative pleaded with the Board for leniency to allow for a transition which would allow her to fully mitigate the tax obligations.

City’s Position

17Counsel for the City referred the Board to Tab 3 of the City’s Book of Documents which shows that the City has on prior occasions granted the Applicant relief from taxes for previous taxation years.

18Counsel informed the Board that the City is opposed to granting relief because the Applicant has sought and obtained relief in the past as shown in the evidence presented by the City, and that in the City’s view, no alternative methods to alleviate the situation have been employed by the Applicant to meet her tax obligations other than to seek relief from the City.

19Counsel for the City expressed concern that the Applicant continues to incur expenses on items for which their costs could have been greatly reduced if proper maintenance and repair were undertaken. Counsel was referring specifically to expenses which resulted from inefficient heating, water system leakage and poor insulation.

20Counsel for the City referred the Board to the Property Tax expense claimed in the Applicant’s Financial Information summary. Counsel is of the opinion that this particular expense should not be included in the expenses because the Applicant does not actually incur that expense because no such payment is received by the City for the property tax account of the Applicant. The total monthly expenses should therefore be $2,395 instead of $2,719. In the City’s view the Applicant in fact has $213 available per month or $2,556 per year which should have been applied to defraying a substantial portion of the property taxes.

BOARD’S ANALYSIS

21The test under s. 323(1) (e) of the Act refers to whether the applicant is unable to pay property taxes due to sickness or extreme poverty.

22In the Board’s view, the threshold for individuals who claim an inability to pay their property taxes because of sickness and extreme poverty as envisaged by the Act cannot simply be that the individuals are unable to make ends meet in the year under appeal. The Act qualifies the level of poverty as “extreme” and in the Board’s view this raises the level of requirement to qualify for relief under the Act to a level that is materially and substantially above that of the simple and ordinary meaning of poverty. The Board believes that individuals must demonstrate that after having called upon every resource available to them and having explored every reasonable opportunity to mitigate any financial stresses there are no means of being able to pay some or all of their property taxes. In addition, the individuals must demonstrate that they have actually taken steps and explored every reasonable opportunity to manage their debts and mitigate their tax responsibility.

23The Board considered the evidence presented by the representative for the Applicant regarding her illness. The Board acknowledges that based on the medical reports presented, the Applicant is incapable of being employed due to her illness. The Board accepts the medical evidence presented which satisfies the Board that the Applicant is unable to work because of sickness.

24The Board has reviewed all of the evidence pertaining to the financial circumstances of the Applicant to determine whether she is experiencing extreme poverty and therefore unable to meet some or all of her tax obligations. In general, the Board is not satisfied that the Applicant’s circumstances rise to the level of “extreme poverty”.

25In reviewing the financial information presented, it appears that the only asset owned by the Applicant is the property in Toronto. The Board notes that as of 2015 the outstanding mortgage against the property stands at approximately $222,000 with a net interest rate of 2.69%. The Board notes that the assessed value of the subject property as of 2015 stood at $552,000 and notes that the current status of the mortgage vis-a-vis the equity status supports the view of Counsel for the City that there exists sufficient equity in the property that can be utilized to mitigate all the issues regarding the tax obligations of the Applicant as well as to rectify the state of repair of the building.

26The Board considered the monthly tax provision of $324 in the expenditure statement provided by the Applicant and alluded to by Counsel for the City. The Board notes that if this monthly sum is actually paid to the City it would almost fully meet the property tax liability.

27The Board also refers to the R. B. statements provided by the Applicant and notes that this account carried an average monthly balance of $2,958 which in the Board’s view could have been utilized to pay some or all of the property taxes for the taxation year 2015.

CONCLUSION

28In assessing an application under the Act, the Board does not only look at the income and expenses of the Applicants but also looks at the full spectrum of the applicant’s financial resources available to him/her and determine whether there was any opportunity that would allow him/her to mitigate their tax obligation as well as to consider whether the applicant has taken deliberate steps to this direction.

29The Board’s position is that the condition of extreme poverty is premised on the proposition that in order to receive relief under this section of the Act the Applicant must demonstrate that he/she is unable to meet the basic necessities of living such as housing, food, heating, hydro, water and clothing and at the same time meet their tax obligations. Further, it is only when it can be unequivocally demonstrated by evidence, that the individual is unable to meet the basic needs and have no other means of paying his property taxes, only then relief may be granted.

30The Board agrees with Counsel for the City that the responsibility of paying property taxes is with the home owner and that when the tax obligation of one taxpayer is not met the tax burden is passed on to all other taxpayers.

31The Board is satisfied that the Applicant and her daughter were forthright and co-operative in providing information to facilitate the hearing. The Board also takes note that the daughter of the Applicant is now actively involved in the financial affairs of her mother and has demonstrated by her action such as paying down the Applicant’s credit card bill and by taking steps in exploring other avenues of assistance such as Home Energy Loan Program, Enbridge Gas Rebate program and IESO rebate program. The Board also takes note that the daughter of the Applicant stated that she intends to move into the premises with her aging mother and grand-mother and this move will assist in better management of the financial affairs of the household. The Board further notes that the Applicant’s daughter stated that she plans to undertake more effective maintenance and repair to stem the inefficiency in a leaking water system and heating caused by poor to no insulation. The Board is satisfied that the Applicant and her daughter are taking appropriate steps to meet the property tax obligations in the next and future tax cycles.

32The Board finds that the Applicant and her daughter explored and/or continue to explore avenues of assistance and have taken deliberate steps aimed at achieving a more stable financial base in order to meet fully the ongoing property tax obligations.

33The Board is not convinced by the argument advanced by the representative for the Applicant that the situation in 2015 is transitory. The Board finds that the issues outlined have been ongoing and that the Applicant has placed a heavy reliance on relief of taxes from the City for prior years as shown in evidence presented.

34The Board finds that with a correction to the monthly expenses the Applicant would have been able to meet a substantial portion of the property taxes for the year under appeal and together with the proposed steps planned, the Applicant will be able to meet her tax obligations.

35The Board, accordingly, denies the application for the cancellation, reduction or refund of taxes for the taxation year 2015 on the property.