Anybody who works within the charitable world will be aware that the “relief of poverty” is one of the classic heads of charity and there are myriad cases which attempt to determine who is “poor”.
But the issue can also arise very indirectly…which is what happened in a recent municipal assessment case in Ontario. We seldom write about property tax assessment cases because they tend to be based on specific statutes and there is little about the decisions which have broad applicability. But occasionally it is good to revisit the issue to see how a judge comes to a conclusion and to contemplate where that judicial technique can apply in other contexts.
The case was headed by Mr. Justice J.W. Quinn of the Ontario Superior Court of Justice. He had to decide whether a particular building “a charitable, non-profit, philanthropic, residential apartment building for seniors of low income” was exempt for real property tax. (It is obvious that such a corporation would be eligible to be registered as a charity…but that was not the matter in issue here.
The legislation reads: [Underlining added]
3(1) All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:
. . . . . . .
- Land owned, used and occupied by,
. . . . . . .
(iii) any charitable, non-profit philanthropic corporation organized for the relief of the poor if the corporation is supported in part by public funds.
Quinn noted that if the residents of building satisfy “the poor” requirement of paragraph 12(iii), the applicant is entitled to, and seeks, an order declaring that the property is exempt from municipal taxation.
The Property Assessing Body (MPAC) argued that the applicant merely provides affordable housing to seniors, rather than relieving poverty.
So to cut to the chase, Quinn had to determine whether the residents were “poor”:
The apartment building at 313A Geneva Street contains 35 one-bedroom units each measuring approximately 574 square feet (currently renting at $596 per month) and five two-bedroom units at approximately 738 square feet each (with the monthly rent being $715). Three of the first-floor units are wheelchair accessible.
Those who seek to reside in this apartment building must complete an application form. One of the eligibility requirements is that prospective tenants be 55 years of age or older. At the present time, the estimated average age of the tenants is 75.
Another eligibility requirement is that tenants must have less annual household income than the maximum allowed under the Contribution Agreement (being $35,000 for a one-bedroom unit and $41,000 for two bedrooms). The approximate actual annual average household income for current tenants of one-bedroom units is $24,140.74 and of two-bedroom units is $30,320.89; the median income of those tenants is $22,042 and $30,471, respectively.
 For the purposes of this proceeding, it is acknowledged that:
▪ According to Statistics Canada, in 2011, the low income cut-off for a metropolitan area with 100,000 to 499,000 inhabitants was $20,065 for one person and $24,978 for two persons; and,
▪ The annual rate of inflation in the period 2011-2015 averaged 1.41%.
I will summarize the above figures as they relate to the 35 one-bedroom units:
One-bedroom maximum household income allowable under Contribution Agreement Actual average household income for tenants of one-bedroom units at 313A Geneva Street Median income for one person at 313A Geneva Street. Statistics Canada low income cut-off for one person Low income cut-off adjusted for inflation $35,000 $24,140 $22,042 $20,065 $21,225
With the Statistics Canada low income cut-off ($20,065) adjusted for inflation, the result ($21,225) is within $1,000 of the median one-person income at 313A Geneva Street ($22,042).
The summarized figures for the five two-bedroom units are:
Two-bedroom maximum household income allowable under Contribution Agreement Actual average household income for tenants of two-bedroom units at 313A Geneva Street Median income for two persons at 313A Geneva Street. Statistics Canada low income cut-off for two persons Low income cut-off adjusted for inflation $41,000 $30,320 $30,471 $24,978 $26,421
Low income cut-offs are described at p. 6 of “Low Income Lines, 2010 to 2011,” Income Research Paper Series, Statistics Canada:
“Statistics Canada has a long history of publishing data on the low income of Canadians. The low income cut-offs (LICOs) were first published in 1967 as part of the 1961 Census monograph series and are by far Statistics Canada’s most established and widely recognized approach to estimating low income cut-offs. LICOs are income thresholds below which families devote a larger share of income to the necessities of food, shelter and clothing than the average family would.”
In that same paper, at pp. 4 and 6, Statistics Canada makes it clear that low income cut-offs are not a measure of poverty but strictly a measure of low income:
“Media, researchers and policy-makers interested in measures of low income are typically concerned with the extent to which individuals in the population are living in poverty. Unfortunately, defining poverty is far from straightforward. The underlying difficulty is that poverty is a question of social consensus, defined for a given point in time and in the context of a given country. Decisions on what defines poverty are subjective and ultimately arbitrary (Statistics Canada, 1999 and Skuterud et al., 2004). Given this, Statistics Canada has always referred to the low income lines as indicators of the extent to which some Canadians are less well-off than others based solely on income and, as such, are low income and not poverty.”
We found this approach particularly interesting as we used the same approach many years ago in dealing with the CRA when attempting to find a matrix which would allow for amongst other things, family size, geographic location and religious constraints to determine which families would be eligible for support from a charity.
The following is how Quinn came to a decision.
It is immaterial that the corporate objects of the applicant do not mention “the poor.” Corporately describing the tenants of 313A Geneva Street as poor would not make them poor. Instead, the court must look to the actual use and operation of the property.
Thirty-five units at 313A Geneva Street are one-bedroom accommodation for senior citizens with an average age of 75 years, an average annual income of $24,140 and a median annual income of $22,042. In the circumstances of this case, such figures equate with any common sense notion of “poor” as envisioned by s. 3(1) para. 12(iii).
And, even if one were to conclude that the two-bedroom units at 313A Geneva Street (of which there are five) do not meet the definition of “poor,” the incomes associated with the 35 one-bedroom units mean that the primary actual purpose of the applicant continues to be to provide affordable housing for poor senior citizens. This actual purpose is consistent with the corporate objects.
The Contribution Agreement speaks of affordable housing. It does not preclude the applicant from providing affordable housing to poor senior citizens.
To qualify for tax exemption under the Assessment Act, s. 3(1) para. 12(iii) does not require that 313A Geneva Street be occupied by the poorest of the poor. The fact that others in the community may be poorer is neither helpful nor relevant.
The 35 senior citizens occupying the one-bedroom units at 313A Geneva Street are poor; they are not cardboard-box-in-the-park poor, but they are poor.
Although a tax exemption means that the applicant will not pay anything for the municipal services that property taxes support, the exemption recognizes the important public interest in providing affordable housing for poor senior citizens. The fact that there is a lengthy waiting list for a unit at 313A Geneva Street is evidence of a need for such housing.
The application is allowed.
We write about this case which has limited application in law as a potential guide to others as to how and analysis of “poverty” might be made in a fashion which would convince a judge…if not a bureaucrat.