R. E. v. City of Toronto, 2019 CanLII 75484

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 06, 2019

FILE NO.:

WR 161342

Assessed Person(s):

R. E.

Appellant(s):

R. E.

Respondent(s):

City of Toronto

Property Location(s):

Withheld

Municipality(ies):

City of Toronto

Roll Number(s):

Withheld

Appeal Number(s):

3319767

Taxation Year(s):

2018

Hearing Event No.:

712079

Legislative Authority:

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

Heard:

June 18, 2019 in Toronto, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

R. E.

Self-represented

City of Toronto

Jennifer Boyczuk⁺ and Melanie Shankar

MEMORANDUM OF ORAL DECISION DELIVERED BY SUBUOLA AWOLERI ON JUNE 18, 2019

INTRODUCTION

1R.E. (the “Applicant”) filed an application to the City of Toronto (“City”) to have her 2018 property taxes reduced, cancelled or refunded because she asserts she was unable to pay these taxes due to either sickness or extreme poverty under section 323(1)(e) of the City of Toronto Act, 2006, S.O., c.11 Sched A (the “Act”). The City passed a by-law delegating its authority to determine such applications to the Assessment Review Board (the “Board”). The Board held a hearing to consider this application.

2The subject property is a single-family detached home built in 1963. It has four bedrooms and two-and-one-half bathrooms. The total area measures 1,518 square feet (“sq. ft.”), with a finished total area of 683 sq. ft. It has one garage space of 240 sq. ft. and an outdoor pool of 392 sq. ft., which the Applicant testified is not functioning.

3The property taxes levied on the subject property in the 2018 taxation year was $4,823.49. The Applicant is requesting a refund of the property taxes paid in 2018 on the basis of sickness.

4At the completion of the hearing, the Board provided an oral decision. The Applicant thereafter requested written reasons.

ISSUE

5The issue before the Assessment Review Board (the “Board”) is whether or not the Applicant’s 2018 property taxes should be cancelled, reduced or refunded as a result of the Applicant’s inability to pay due to sickness or extreme poverty under s. 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c.1, Sched. A (“Act”).

DECISION

6The Board determines that the Applicant could reasonably have been able to pay all of her 2018 property taxes.

7The Board therefore dismisses the application for a refund of the property taxes for the 2018 taxation year.

REASONS FOR DECISION

Legislation

8Section 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;

9In order for the Applicant to qualify for relief, the Board must first determine if the Applicant had the ability to pay all or some of her property taxes. If the Applicant could pay her 2018 property taxes, she does not qualify for relief. If there is an inability to pay, the Board must then determine if the inability to pay taxes was due to either sickness or extreme poverty.

Evidence and Analysis

10The Applicant resides in the subject property with her new spouse and her two children. The Applicant testified that after her divorce, she remarried but could not sponsor her husband to come to Canada due to her low income until 2018. She also testified that her husband is a newcomer, he is 65 years old and he is just settling in Canada. The Applicant further added that her new husband did not earn income in 2018. Consequently, in making a determination if the Applicant would have been able to pay her property taxes, the Board will only review the financial resources available to the Applicant.

Ability to Pay

Applicant’s Submissions

11The Applicant testified that she was self-employed for two months in 2018. She operated a delivery business for three months from December 2017 to February 2018. According to the Applicant, shipment from the parent company of the business suddenly discontinued with no valid reason and consequently she could no longer operate her business as there was no merchandise to deliver. The Applicant testified that this situation led to a decline in her mental health. She was unable to secure a job. She started living on her Child Tax Benefit (“CTB”), line of credit and credit cards. She eventually had a minor stroke and is currently receiving funds from the Ontario Disability Support Program (“ODSP”).

12The Applicant further testified that she had property tax arrears and was referred to collections. The collection company called the Applicant’s bank regarding her outstanding property tax arrears and on December 21, 2018, her bank paid the outstanding property tax arrears in full. According to the Applicant, this action by the bank led to a $400 increase in her monthly mortgage payment and due to this increase she is finding it difficult to pay her utility bills.

Source of Income

13The Applicant’s source of income was from two months payment from the delivery business, CTB and gifts from her church. The total monthly income for the 2018 taxation year was $1,924.97.

Expenses

14The Applicant’s monthly household expenses in 2018 was $5,705.76. This provided a net income of (-$3,780.79).

Assets

15The Applicant owns the subject property. The City of Toronto (the “City”) provided the destination value of the subject property for the 2018 taxation year as $889,000. The Applicant objected to this value submitting that the subject property was in a state of disrepair. The Board advised the Applicant that this Application was not the appropriate forum to argue about the assessment of the subject property and she should contact Municipal Property Assessment Corporation (“MPAC”).

16The Applicant’s financial statement submitted to the City is summarized in Table 1 below:

Table 1

Income

$1,924.97

Expenses

$5,705.76

Net Income

(-$3,780.79)

Assets/Liabilities

Amount ($)

Assets

Home (Destination Value from MPAC)

889,000

Total Asset

889,000

Liabilities

Mortgage

411,209.51

LOC

75,000

Credit Cards

VISA

21,292.33

MasterCard

918.15

Canadian Tire

525.12

Total Liabilities

$508,945.11

Net Asset

(Total Assets Less Liabilities)

$380,054.89

17The Applicant testified that she refinanced the home in 2014 and she had approached the bank again to refinance the home but was declined. Furthermore, she added that in 2018 and 2019, she tried to sell the home. A realtor came into the home and advised her that she will need to renovate the home before listing it for sale and she does not have the money to carry out the renovation. She concluded by submitting that she requests that the Board grants her the refund of $4,823.49, being the total amount of property taxes levied on the subject property, in order for her to repay the bank and this will result in a reduced monthly mortgage payment.

Sickness

18The Applicant presented into evidence Form 2, which is a Doctor’s Statement to corroborate her testimony of sickness. The Physician advised that the Applicant suffers from major depression, anxiety and post-traumatic stress disorder and is currently seeing a psychiatrist. The Physician also concluded that it is unknown if the Applicant will be able to return to work.

City’s Submissions

19Jennifer Boyczuk, on behalf of the City submits that the City is not taking a position in this Application; however, it has some concerns regarding the Applicant’s discretionary expenses. To support her submission, she referred the Board to its prior decision in E. D. v City of Toronto, WR 128986 (unreported), (“E.D.”) where the Board determined at paragraph 29, that discretionary expenses should not take precedence over the payment of property taxes.

20Ms. Boyczuk made submissions on these discretionary expenses:

a) Car Expenses: Ms. Boyczuk submitted that the Applicant was paying a lot on car insurance and gas totaling $580 monthly;

b) Meals outside the Home: Ms. Boyczuk submitted that the Applicant had excessive amounts spent on meals outside the home on her credit card statements. Melanie Shankar, a revenue analyst employed by the City, calculated the total amounts spent by the Applicant on meals outside the home for 4 months. Ms. Shankar testified that the following amounts was spent by the Applicant on this expense: September 2018 – $215.47, October 2018 - $360.66, November 2018 - $419.48 and December 2018 - $200.75. Also, in October 2018, $113.45 was spent on meals outside the home from the Applicant’s debit card. Ms. Boyczuk submitted that this provides a total of $1,309.81. Ms. Shankar further testified that the entire amount spent on meals outside the home for all the months in 2018 were not calculated as they were too many to calculate and this can prolong the hearing.

c) Extra-curricular activities (Music Lessons): Ms. Boychck further submitted that the Applicant paid for music lessons for her children at a prominent music store and also purchased a keyboard and drums. Ms. Shankar testified that this amounts to $45.00 per month for the music lessons and $89.00 per month for the musical instruments for a total of $1,608 in 2018.

d) Charitable Donations: The Applicant had made some donations to some notable charities in 2018; Ms. Shankar testified that these donations amount to $60.00 per month. According to Ms. Shankar, the total of these donations in 2018 was $720.00.

e) Travelling expenses for Adult Child: The City discovered through the Applicant’s credit card that there were expenses for a trip to Israel in 2018, which Ms. Shankar testified amounts to $108 per month. According to Ms. Boyczuk this expense amounts to $1,296.00 in the year.

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. In this application, the Board must decide if the Applicant was unable to pay all or part of her property taxes. If the Applicant could not reasonably have paid all or part of her property taxes, the Board will then determine if it was due to sickness. This requires a contextual analysis of the Applicant’s income and expenses and an examination of all financial resources available to her in 2018. This will be used to determine if she could have mitigated her property tax obligation.

22The Board finds that the Applicant had the financial ability to pay all her 2018 property taxes notwithstanding her sickness.

23The Applicant had a deficit net income in the amount of (-$3,780.79). Ms. Boyczuk submitted that the Applicant had an excessive amount of discretionary expenses in 2018. A discretionary expense does not constitute a basic expense of applicants making applications under this section of the Act. Applicants applying for relief can run their home or business without utilizing discretionary expenses. As further determined by the Board in E.D., discretionary expenses must not take precedence over the payment of property taxes.

24The Board shall make a determination on each of the expenses submitted by the City, as to whether they constitute discretionary expenses:

a) Car Expenses: The Board finds that this is not a discretionary expense but a necessity, as the Applicant testified that the car is basically junk and that a friend wanted to dispose of it as scraps until she indicated her interest in it. She further testified that she is suffering from arthritis and without a car in winter, this condition could deteriorate.

b) Meals outside the Home: The Board finds that this is a discretionary expense. A review of the Applicant’s credit card and bank account statements reveal excessive amounts spent on meals outside the home. Ms. Shankar testified that she only reviewed expenses for meals outside the home for 4 months, which provides a total of $1,309.81. The Applicant testified that these expenses were incurred by her children and due to the divorce from her ex-husband; she does not want him to complain that she is making the children suffer by not feeding them. Furthermore, she testified that her ex-husband usually repays her for the amounts spent on this expense, although she added that she does not deposit it into her bank account, she utilizes the repayment for other expenses in the home. She submitted that the amount that she ends up spending for meals outside the home is $100 per month. The Applicant claims that she would have not been able to pay her property taxes and at the same time she allows her children to spend excessive amounts on meals purchased outside the home. The total amount the Applicant spent in 2018, on meals outside the home, based on $100 per month is $1,200. This amount could have been used in mitigating her property tax obligation.

c) Extra-curricular activities (Music Lessons): The Board finds that in this specific application, this is a discretionary expense. The Applicant testified that she enrolled her children for music lessons in August 2018 and also purchased drums and a keyboard. She added that the music lesson served as a distraction for one of her children who was engaging in illicit activities on the street such as smoking marijuana. The purpose of this extra-curricular activity was not medical as the Applicant did not produce any medical note from a Physician. She willfully decided that this activity will keep her child off the street and from smoking marijuana. While this is a commendable act by a mother but it is at the expense of paying her property taxes which is a legal obligation. The children had not been playing the musical instruments for a long time such that it would seem as they are being deprived of this activity after their parent’s divorce. They were enrolled in music lessons at the later part of the year. There are some other government sponsored programs that the Applicant could have registered her children for free, including counseling. The purchase of the musical instruments and the music lessons in this Application, which was not recommended by a physician, is deemed as a discretionary expense. The Board finds that the Applicant spent $1,608 on this discretionary expense in 2018. This amount is based on the uncontested expenses provided by the Applicant in the Applicant’s supporting financial documentation provided to the Board.

d) Travelling expenses for Adult Child: The Board finds that this is also a discretionary expense. The Applicant testified that the trip was to help her daughter, who was suffering from depression and she was trying to help her out of this sickness. The Applicant further added that a Physician recommended that she should involve her daughter in things that her daughter likes. The Applicant testified that since her daughter likes production, she decided that her daughter, who was not living in the subject property in 2018, should go on a trip to Israel with a notable nonprofit organization to volunteer in the production department. According to the Applicant, the Physician did not advise her daughter to travel out of Canada to engage in activities that she likes. Again, the Applicant willfully decided to purchase a ticket for her daughter to travel to Israel. The Applicant’s daughter could still have engaged in production for an organization in Ontario, especially when the Applicant was seeking for an opportunity for her daughter to volunteer and not for employment. The Board finds that the Applicant spent $1,296.00 on this discretionary expense in 2018. This amount is based on the uncontested expenses provided by the Applicant in the Applicant’s monthly credit card statements provided to the Board. This amount could also have been utilized to mitigate the Applicant’s property tax obligation in 2018.

f) Charitable Donations: The Board finds that this is a discretionary expense. The Applicant made no submissions on this. The total of these donations made by the Applicant in 2018 was $720.00. The Applicant claims she could not have reasonably paid her property taxes in 2018, but she was donating the money she had, which could have been used to pay her property taxes. Donating to charity is a good deed, however, it should not take precedence over paying property taxes which is a legal responsibility for property owners.

25The total amount spent by the Applicant on these discretionary expenses was $4,824,00. The total amount of property taxes levied on the subject property in 2018 was $4,823.49. The Applicant could have used the amount spent on discretionary expenses to mitigate her property tax obligation. As determined by the Board in M.M.U. v Toronto (City)., 2015 CanLII 46826 (ON ARB):

… to qualify for relief under this section of the Act the condition cannot be one where an individual simply cannot make ends meet but amounts to a situation where the Applicant after having called upon every resource available to him and having applied every reasonable means to mitigate and manage his expenditures is left with no means of being able to pay some or all of their property taxes. In the Board's view the Act envisages that an individual seeking relief on application under s. 323 of the Act should clearly demonstrate that for the year under appeal the Applicant, after scrupulously managing his/her resources and expenditures, was left with no resources available to meet his/her obligations to provide for the basic necessities of living and at the same time pay some or all of his/her property taxes.

26The Act envisages a situation whereby, after calling upon all financial resources available to the Applicant, the Applicant is still unable to pay all or part of the property taxes. Applications under this section of the Act are of last resort and Applicants must be in dire need to obtain relief.

27The Board determines that the Applicant could have reasonably been able to pay all her property taxes, and in accordance to the Act, there is no need to make a determination on the eligibility criteria of sickness, as the ability to pay has been established by the Board.

CONCLUSION

28The Board finds that the Applicant could reasonably have paid all her 2018 property taxes. The Board therefore dismisses her application for a refund of all or part of her 2018 property taxes.