Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 12, 2018

FILE NO.: WR 149442

Assessed Person(s): E. D. M.

Appellant(s): E. D. M.

Respondent(s): City of Toronto

Property Location(s): Withheld

Municipality(ies): City of Toronto

Roll Number(s): Withheld

Appeal Number(s): 3224156

Taxation Year(s): 2016

Hearing Event No.: 687466

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

Heard: November 17, 2017 in Toronto, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

E. D. M.

Self-represented

City of Toronto

Alison Mintoff⁺ and Luis Verastegui

DECISION OF THE BOARD DELIVERED BY MARGARITA OKHOVATI

INTRODUCTION

1E.D.M., (the “Applicant”) is a 45-year old single woman who owns and rents out the subject property which is a two bedroom and two bathroom residential condominium with a total area of 907 square feet (“sq. ft.”) with a parking space. The Applicant does not live in the subject property but lives with her mother and four year old son in a rented three bedroom and three bathroom detached house.

2The Applicant filed an application with the City of Toronto (the “City”) seeking a cancellation, reduction or refund of property taxes for the 2016 taxation year under s. 323(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A. (“Act”), due to sickness and/or extreme poverty.

3The first sitting of this hearing was scheduled on June 30, 2017. That hearing was adjourned to November 17, 2017 for the Applicant did not provide the Assessment Review Board (“Board”) with all the required supporting documents.

ISSUE

4The issue before the Board is to determine whether the Applicant’s property taxes for the 2016 taxation year should be cancelled, reduced or refunded as a result of the Applicant’s inability to pay due to sickness or extreme poverty.

DECISION

5The Board finds that based on the evidence before it, the Applicant would have been able to pay her 2016 property taxes notwithstanding its finding of sickness. The Board finds that in 2016 the Applicant was not in a condition of extreme poverty. The Board therefore, dismisses this application for the 2016 taxation year.

REASONS FOR DECISION

Legislation

6Section 323.(1)(e) of the Act provides:

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;

7In 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 her property taxes.

EVIDENCE AND ANALYSIS

Applicant’s Evidence and Position

Sickness

8The Applicant testified that on March 30, 2016, she was hospitalized for viral infection for two weeks. In the middle of April 2016, she returned to the hospital again for one week as a result of taking wrong medication. After being released from the hospital she received home care until the middle of September 2016.

9The Applicant submitted a medical report (Exhibit 2) from Dr. Raymond Rupert dated June 22, 2017, who stated, “the Applicant sustained a catastrophic endocrine sickness in October 2015. She also had extensive surgery which rendered her immobile for six months. She ceased working in March 2016. The patient will be able to resume working at a future date.” The Applicant submitted that she was unable to pay her property taxes because of sickness.

Extreme Poverty

10The term “extreme poverty” is not defined under the Act. In determining whether the Applicant is in a situation of extreme poverty and is unable to pay her taxes because of such poverty, the Board has to consider the evidence presented by the Applicant regarding her financial situation, which is not limited to her income and expenses. The Applicant submitted that she was living in extreme poverty and was therefore unable to pay her property taxes.

Applicant’s Financial Evidence

11The Applicant submitted a copy of the Form 1 – Financial Information (Exhibit 1) and also provided evidence at the hearing regarding her total monthly income, expenses, assets and liabilities as detailed hereunder:

Income

Employment Income

$ 25.00

Employment Insurance

$1,752.00

Payment from Mother

$1,000.00

Child Tax Benefit

$ 185.35

Rental Income

$1,487.50

Other Income

$ 633.00

Income Total

$5,082.85/month

Expenses

a. Mortgage

$ 933.02

b. Property Taxes

$ 223.59

c. Home Insurance

$ 39.42

d. Condominium Fees

$ 655.67

e. Water/Heat/Hydro

$ 321.00

f. Telephone (land line)

$ 40.00

g. Cell Phone

$ 45.00

h. Cable

$ 109.00

i. Internet

$ 50.00

j. Groceries

$ 600.00

k. Meals Outside

$ 80.00

l. Household Supplies

$ 130.00

m. Transit/TTC

$ 50.00

n. Interest on Credit Card/Line of Credit

$ 40.00

o. Loan

$ 225.00

p. Child Day Care

$1,147.67

q. Clothing

$ 50.00

r. Recreation/Entertainment

$ 40.00

s. Florida - Uncle’s Funeral/Vacation

$ 301.12

t. Medication

$ 237.75

u. Taxis

$ 75.00

v. Rental Cost

$3,100.00

Expenses Total

$8,493.24/month

NET INCOME TOTAL

$-3,410.39/month

Assets

Assessed value of the house in 2016

$390,000.00

R.R.S.P.

$ 18,404.06

Savings Account

$ 1.07

Chequing Account

$ -161.00

Assets Total

$408,244.13

Liabilities

Credit/Debit card(s)

$ 5,087.00

Loan(s)

$ 9,462.00

Mortgage

$168,370.00

Line of Credit

$ 22,530.00

Liabilities Total

$ 205,449.00

NET WORTH TOTAL

$+202,795.13

12Based on the information submitted in the Form 1 – Financial Information (Exhibit1), the net worth of the Applicant is $202,795.13.

Applicant’s Final Remarks

13“I may have had to sit down and make choices. My choices are not my cheapest choices. I have to know what I eat as a diabetic person”.

City’s Evidence and Position

14Luis Verastegui, City Representative advised the Board that the Applicant’s property taxes for 2016 is $2,683.09 plus compounded interest of $443.49. The Applicant has paid $496.91 of the total of $3,126.58 and presently, the outstanding taxes for 2016 is $2,629.67.

Sickness and Extreme Poverty

15Alison Mintoff, Counsel for the City, submitted that the City was not taking any position with respect to the Applicant’s sickness. She stated that the City opposes this application as the Applicant does not have an inability to pay her 2016 property taxes and the Applicant’s case does not qualify as a case of extreme poverty. She submitted further that the Applicant’s case should be dismissed for the following reasons:

• The Board should not accept all the expenses listed by the Applicant in the Financial Information Form for she did not use her discretion in expenses incurred like cable, internet, two telephones (land line telephone and cell phone), going to film festivals, taking taxis, going to her uncle’s funeral/vacation and eating outside, which in itself would be enough to pay her property taxes of $223.59 per month.
• The assessed value of the subject property for 2016 taxation year is $390,000. The City Representative stated that in August 2016 a much smaller condominium than the subject property (with one bedroom and one bathroom) in the same building was sold for $500,000. Even if we consider the assessed value with the balance of mortgage in December 2016 for $168,370, the equity in the house is more than 56% which would enable her to pay her 2016 property taxes. The Applicant did not explore options to leverage on the equity in the subject property.
• The Applicant has funds in the RRSP for $18,404.06 and this would enable her again to pay her property taxes.
• The Applicant borrowed money from her line of credit in order to pay her credit card and other expenses but never made a conscious decision to pay her property taxes.

Board’s Analysis

16The 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.

17As noted in paragraph 15 above, the Applicant’s evidence regarding sickness was not disputed by the City. The Applicant’s claim of sickness was supported by a written statement by Dr. Raymond Rupert. The Board finds this evidence to be reliable and persuasive and therefore finds that the Applicant satisfies the “sickness” portion of the test.

18The Applicant’s inability/ability to pay her 2016 property taxes will be discussed in conjunction with the discussion about poverty.

19The 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.

20The Board has considered the oral testimony of the Applicant and has reviewed all of the evidence pertaining to her financial situation to determine whether the Applicant is able to pay her 2016 property taxes and whether the Applicant is living in extreme poverty.

21The Board is not satisfied that the Applicant is unable to pay her taxes because of sickness nor that her circumstances rise to the level of “extreme poverty” for the following reasons:

• The amount of equity in the subject property - the uncontested evidence from the city was that in August 2016 a much smaller condominium than the subject property (with one bedroom and one bathroom) in the same building was sold for $500,000. Considering this value, the equity on the subject property is even greater than its assessed value and this equity can be utilized to mitigate the tax obligations of the Applicant.
• Moreover, the Board notes that the Applicant received $6,643.94 from the Federal Government as a tax refund for 2016 (Exhibit 5). In the opinion of the Board, the Applicant could use a small portion of this money to pay her property taxes.
• Furthermore, the Applicant testified that in 2016 she spent $3,613.47 to go to her uncle’s funeral/vacation in Florida with her mother and son. This amount includes tickets for herself, her mother and son, hotel expenses for $835.44 and taking a cab for $US346.70 in Orlando, Florida (Exhibit 6). In the absence of any corroborating evidence, the Board finds the Applicant’s testimony regarding her uncle’s funeral lacks credibility.
• Moreover, the Applicant testified that presently she is using the services of wheel transportation. She was questioned as to why she did not use it in 2016 and instead she spent a lot of money on taxi cabs. She stated that firstly, she did not apply for it in time because she lived close to the hospitals and she only paid $10.00 on taxi cabs and secondly, she prefers to take taxi when she returns home from movies and film festivals. She stated that she also takes a taxi for going to groceries and taking her son to birthday parties.

22In the circumstances of this case, the Board finds that many of the monthly expenses are discretionary in nature and are above the basic living needs of the Applicant and her son. For example, spending $3,613.47 for going to Florida breaks down into a $301.12 monthly cost. In addition, there are other costs averaged out on a monthly basis such as having a cell phone and also a land line telephone for $40.00, paying $159.00 for Cable and Internet, spending $80.00 for eating outside, spending $75.00 on taxi cabs and $40.00 on film festivals. These expenditures averaged over the year on a monthly basis total $695.12. The amount of this spending indicates that the Applicant had an ability to pay her monthly property taxes which is only $223.59 per month. As 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.

23The Board agrees with Counsel for the City that the payment of property taxes remains one of the foremost obligations of all home owners and when this obligation is not met the tax burden is passed on to all other tax payers.

24Having examined all the evidence and statements made by the Applicant, the Board is not persuaded that the Applicant is unable to pay her property taxes despite her medical condition and does not qualify for relief under the Act from paying all or part of her property taxes.

CONCLUSION

25Based on the reasons stated above, the Board finds that the Applicant did not establish that she had an inability to pay her taxes because of sickness, nor that extreme poverty existed in her case.

26The Board therefore dismisses the Applicant’s application and determines that this application does not qualify for relief under the Act.