S. S. v. City of Toronto, 2017 CanLII 85725

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 13, 2017

FILE NO.: WR 149092

Assessed Person(s): S. S.

Appellant(s): S. S.

Respondent(s): City of Toronto

Property Location(s): Withheld

Municipality(ies): City of Toronto

Roll Number(s): Withheld

Appeal Number(s): 3196956

Taxation Year(s): 2016

Hearing Event No.: 687476

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

Heard: November 1, 2017 in Toronto, Ontario

APPEARANCES:

Parties	Counsel^+^/Representative
S. S.	T. T. A. F.
City of Toronto	Jennifer Boyczuk^+^ Melanie Shankar

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1S. S. (“Applicant”) lives alone in the subject property. The subject property was purchased in 1978 for $70,000 and in the taxation year 2016, there was no registered encumbrance on it. The first floor is approximately 800 square feet (“sq. ft.”), classified as Commercial (“CT”). The Applicant and his wife operated a tailoring business on this floor which closed in 2002 after his wife’s death. The Applicant resides on the second floor which is also approximately 800 sq. ft., with two bedrooms, classified as Residential (“RT”). The Applicant filed this application to have his property taxes refunded on the basis of sickness and extreme poverty.

2The Applicant advised the Assessment Review Board (“Board”) that the property tax levied on the subject property is too high and he cannot afford to pay due to his low income. Furthermore, he does not understand why he is still paying property tax on the commercial portion, when he no longer operates the business. He requested the Board to reduce his property taxes. The Board advised the Applicant that this application was not the proper forum to discuss a tax class change or an assessment appeal. The City of Toronto (“City”) provided the Applicant and the Board with Exhibit 4, a response by MPAC declining a tax class change for the subject property citing amongst other things that the subject property is still in the commercial/residential tax class.

ISSUE

3Should the Applicant be granted a full or partial refund of the property taxes paid in the taxation year 2016 due to sickness or extreme poverty pursuant to s. 323.(1)(e) of the City of Toronto Act (“Act”)?

DECISION

4The Applicant should not be granted a full or partial refund of the property taxes paid in the taxation year 2016 due to sickness or extreme poverty pursuant to s. 323.(1)(e) of the City of Toronto Act (“Act”).The Board determines that on a balance of probabilities, the Applicant would have been able to pay the property taxes for the 2016 taxation year despite his sickness and/or extreme poverty. The application is dismissed.

REASONS FOR DECISION

Legislation

5Section 323.(1)(e) of the Act provides:

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;

6In making a determination in this application, the Board must first determine whether sickness or extreme poverty exists, which is the first part of the two part test. If neither sickness nor extreme poverty exists, the Applicant would not qualify for relief. If either exists, to fulfill the second part of the test, the Applicant must demonstrate an inability to pay all or part of his property taxes.

EVIDENCE AND ANALYSIS

Sickness

7The Applicant presented corroborating documentary evidence of his sickness in Exhibit 1, a Doctor’s Statement, which provides that the Applicant suffers from chronic osteomyelitis in addition to various other illnesses. The Doctor concluded that the Applicant will probably not be able to return to work. The City takes no position on this.

8The Applicant further advised the Board that this application should also be considered under extreme poverty. The Board must consider the Applicant’s ability to pay all or part his property taxes due to sickness and extreme poverty.

Extreme Poverty

9The term “extreme poverty” is not defined under the Act. In determining whether the Applicant is in a situation of extreme poverty, the Board has to consider the evidence presented by the Applicant regarding his financial situation and a full spectrum assessment of the financial resources available to him in 2016, which is not limited to his income and expenses.

Ability to Pay

Applicant’s Submissions

10The Applicant was able to make submissions before the Board through his sister and daughter who interpreted for the Applicant. The Applicant testified that out of his annual income of approximately $21,000, 40% of it is used to pay his property taxes. Furthermore, that after deducting his expenses he has a deficit and he has to look for other means to pay the short fall in order to make ends meet. In support of his application, he provided Exhibit 1 which includes: Form1-Financial Information, supporting documents such as household utility bills, and property tax statements.

Source of Income

11The Applicant submits that his source of income for 2016 was from Canada Pension Plan (“CPP”), Old Age Security (“OAS”), OAS Supplement and an annual payment of $648.38, which he receives from Switzerland as pension when he worked there some years ago. The parties consented to a 2016 monthly income of $1,779.37.

Expenses

12A review of the Applicant’s financial information form, reveals a 2016 total monthly expense of $3,068.72, giving rise to a net income of (-$1,289.35). He testified that he has two charges for some utilities due to the commercial component of the subject property such as Heat: $95.87, Hydro: $198.03 and Telephone: $138.44.

13The Applicant also had other expenses which are summarized in the Income and Expenses Table below:

Table 1

Income/Expenses	Amount ($)
Income (monthly)	1779.37
Expenses (monthly)
Mortgage	0.00
Property Tax	680.88
Home Insurance	142.11
Water	19.17
Heat	95.87
Hydro	198.03
Telephone	138.44
Groceries	400.00
Household supplies	100.00
Cell Phone	25.00
Car Insurance	127.50
Gas	300.00
Car Repairs/Maintenance	104.16
Clothing	116.66
Recreation/Entertainment	65.00
Vacation	417.90
Other Expense	138.00
Total Expenses	3,068.72
Net Income (Total Income less Expenses)	-1,289.35

14The Applicant testified that he spends approximately $138 monthly on lottery tickets, gift cards and other odd items. He belongs to a social club which will be known for the purposes of this application as S. N., where he pays an annual membership fee of $300 and a payment of $20 twice a month. This adds up to $65 per month for recreation and entertainment. He also testified that he went on vacation in 2016, which costs $3,514.90 for the ticket as revealed in his TD Visa statement and he spent approximately $1,500 during this trip making a total of $5,014.90. The Applicant submits that just one trip in a year is reasonable and not unheard of and in fact he has deprived himself of several things to his own detriment in order to pay his property taxes. He submits that his monthly gasoline payment is high because he drives a 2008 Montana minivan, which consumes a lot of gasoline.

Assets

15The City provided the assessed value of the subject property by MPAC as $470,000 apportioned as $188,000 for Residential Taxable: Full (RT) and $282,000 for Commercial Taxable: Full (CT). The City argued that this assessed value may be higher based on the sale of a comparable property on the same street as the subject property which sold in June 2016 for $600,000. The Applicant opposed this, arguing that the subject property is actually on an intersection and not subject to all conditions of the comparable property; hence it is not a comparable property. Furthermore, that he is not satisfied with the municipal services provided by the City.

16The Applicant also has a Tax-Free Savings Account (“TFSA”) valued as of December 31, 2016 for $36,363.51. His net asset is $507,453.88 with no liabilities.

17There is currently no outstanding property tax for 2016 taxation year. The total property tax paid by the Applicant in 2016 was $8,170.52. This was paid on time without interest/penalties with a deduction of $65.63 applied by the City as Senior Cancellation Tax Program.

18Table 2 sets out the breakdown of the Applicant’s assets and liabilities:

Table 2

Asset/Liabilities	Amount ($)
Assets
Home (Destination Value from MPAC)	470,000
Car	1,000.00
Chequing Account	90.37
TFSA	36,363.51
Total Assets	507,453.88
Liabilities	0.00
Credit cards	0.00
Mortgage	0.00
Net Assets (Total assets less liabilities)	507,453.88

19The Applicant concluded his submission by urging the Board to order a full refund of the property taxes he paid in 2016.

City’s Submissions

20Jennifer Boyczuk, on behalf of the City, submits that the City opposes the application as it does not qualify as a case of extreme poverty. Furthermore, that despite the Applicant’s sickness, he has shown that he has the ability to pay all of his property taxes, which he paid and the application should be dismissed for the following reasons:

a. The Applicant has not explored options to mitigate his property tax obligation. He has not leveraged on the equity in the subject property. He has not attempted to lease the commercial space on the first floor and he has not leased the second room on the second floor. She cited G.H. v. The City of Toronto, O.A.R.B.D. Decision File No. WR68915, where the Board determined that the Applicant had considerable equity in the home, which he “could draw upon to pay down the outstanding property taxes”;

b. The Applicant has a TFSA account with a balance of $36,363.51, which he has used to pay any short fall in his expenses;

c. The Applicant submits that he has a low income; this is not equivalent to extreme poverty. In 2016, the Applicant paid all the property taxes, and has demonstrated that he is able to make ends meet without a credit card debt. She referred the Board to N.H. v. Municipal Property Assessment Corp. Region No. 9, [2009] O.A.R.B.D. No. 1, where Member Sharma determined that low income is not the same as extreme poverty; and,

d. The Applicant has a number of discretionary expenses.

Board’s Analysis

21The intent of the legislation is to provide relief for property owners who cannot pay their property taxes in full or in part due to sickness or extreme poverty in a given taxation year. Either of these two eligible criteria must exist in order for a property owner to fulfill the first part of the test.

22The Applicant has provided a Doctor’s Statement, which provides reliable and corroborating evidence that he is sick. The Board determines that sickness exists, which fulfills the first part of the test.

23The Applicant further testified that he is also in a state of extreme poverty. To determine if the Applicant is in a state of extreme poverty, and to further determine his inability to pay his taxes due to sickness and extreme poverty, an analysis of the Applicant’s financial circumstances will be considered.

24The Applicant had a monthly deficit of (-$1,289.35), despite this, he was still able to pay all of his property tax in 2016. The Applicant submits that all his expenses are reasonable and not discretionary. In applications of this nature, a discretionary expense does not constitute the basic need of applicants. Applicants applying for relief can run their home or business without utilizing discretionary expenses. As further determined by the Board in E.D. v. Municipal Property Assessment Corporation (MPAC) Region 9 and City of Toronto, [2015] O.A.R.B.D., Decision File No. WR 128986, discretionary expenses must not take precedence over the payment of property taxes.

25The Applicant’s annual discretionary expense in 2016 includes: Recreation and Entertainment $780, Vacation $5,014.90, other expense for lottery tickets gift cards and other odd items $1,656 which provides a total of $7,450.90. This excludes the utility payments for the commercial portion of the subject property, which the Applicant still paid, while the business was not in operation. These additional utility payments are not discretionary expenses, however, these payments could have stopped when the business closed but the Applicant still chose to pay it. The Applicant paid all the property taxes despite these discretionary expenses without having a credit card debt as he further testified that he always paid up any balance on his credit cards.

26The Applicant had a net worth of $507,453.88 with no liabilities. He did not explore options to leverage on the equity in the subject property. He did not attempt to lease the commercial portion of the subject property. The Applicant submitted that exploring other options at this late stage in his life will give rise to safety concerns and comfort issues of having a stranger living with him. Furthermore, he submitted that he is totally against obtaining a loan to pay his property taxes, and questioned how he would pay off the loan. He further submits that the government of Ontario is against a vicious cycle of borrowing and is trying to keep people in their homes and no financial institution will give him any loan although he had not approached any bank. He further testified that from his culture, they work hard to pay what is due without borrowing. All home owners have a primary responsibility to pay their property taxes. The Applicant did not have any need to obtain assistance from a financial institution to pay his property tax, as he drew from his savings to make the necessary payment.

27The Applicant submitted that all the case law cited in the City’s Book of Authorities are not relevant to his situation and provided the Board with two cases, which he deemed relevant. In the two cases: K.J.P. v. Hamilton (City), 2017 CanLII 278 (ON ARB) (“K.J.P.”) and B.L.S. v. Hamilton (City), 2016 CanLII 63432 (ON ARB) (“B.L.S.”), the Board granted a cancellation of both Applicants’ property taxes due to sickness. The Applicants’ only asset in these two cases was their home and they both had outstanding mortgages. The Board also determined that their expenses were reasonable and verifiable. Member Sharma determined in K.J.P. (supra) that:

In viewing an application under the Municipal Act, 2001, the Board does not only look at the income and expenses of the Applicant 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 the tax obligation as well as to consider whether the Applicant has taken steps to this direction.

28These two cases are distinguishable from the present application. The Applicant was still able to pay all of the property taxes in 2016 despite his sickness and his claim of extreme poverty. The Applicant had a total of approximately $7,450.90 as discretionary expenses. In 2016, the Applicant had a net worth of $507,453.88 with no liabilities. Using Member Sharma’s words in B.L.S. (supra), the Applicant had other financial opportunities to use to pay his property taxes.

29This application does not qualify as an extreme poverty case. As determined by the Board in A.M. v. Toronto (City), 2016 CanLII 42756 (ON ARB),

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.

This is not the case in this application as the Applicant drew from his available financial resources to pay his property taxes.

CONCLUSION

30The Board finds that despite the Applicant’s sickness and his claim of being in extreme poverty, he would have been able to pay all of his 2016 property taxes, which he did pay in full in 2016. The Board determines that this application does not qualify for relief under the Act.

31The Board dismisses the application for the taxation year 2016.