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In Part 1 of this two-part blog, we explore the Assessment Review Board’s refusal to decide whether a property is exempt from municipal taxation in some cases but making an exemption determination in others.
Parties continue to take their claims for an exemption from municipal taxation to the Assessment Review Board. The Board generally says that it cannot hear those claims, and that exemption claims must be made to the Superior Court. The Board has issued decisions on that point as recently as this year, see for example Wilson v Municipal Property Assessment Corporation, Region 01, 2021 CanLII 44050 (ON ARB) and Bauman v Municipal Property Assessment Corporation, Region 31, 2021 CanLII 32517 (ON ARB).
In Wilson, the Appellant had a communication tower on the property and alleged that the tower was exempt pursuant to paragraph 3(1)21 of the Assessment Act. The Board dismissed the appeal on the basis that it had no jurisdiction to determine whether the communication tower was exempt.
In finding it had no jurisdiction, the Board relied on sections 40 and 46 of the Assessment Act. Subsection 40(1) sets out a list of grounds on which a party may appeal to the Board and exemption is not specifically listed. Subsection 46(1) states that an application may be made to Superior Court for any matter relating to an assessment, but subsection (1.1) says that “no application to court may be made for the determination of a matter that could be the subject of an appeal under subsection 40 (1).”
The Board in Wilson relied on those provisions, and previous Board decisions, in reaching its conclusion that it had no jurisdiction to decide the exemption question that was brought before it.
One of the more often cited Board cases for the proposition that only the Superior Court can make exemption determinations is Municipal Property Assessment Corporation Region 23 v North American Railway Hall of Fame, 2015 CanLII 43403 (ON ARB). In that case, MPAC applied an exemption to a portion of the property and the taxpayer, the North American Railway Hall of Fame, alleged that a larger portion was in fact exempt. MPAC brought a motion to dismiss the appeal on the basis that the Board had no jurisdiction to determine exemptions. The North American Railway Hall of Fame argued that the issue of exemption was already decided by MPAC and the only issue was the extent to which the exemption applied to the property. The Board agreed with MPAC and dismissed the appeal on the basis that it had no jurisdiction to determine the portion of the property that was exempt.
North American Railway Hall of Fame retained counsel and sought a review of the original decision. That decision is reported at North America Railway Hall of Fame v Municipal Property Assessment Corporation Region 23, 2016 CanLII 14708 (ON ARB) On review, the Board upheld the original decision and found that the Board lacked the jurisdiction to determine questions of exemption.
The Board relies on cases like North American Railway Hall of Fame, and the wording of the Assessment Act, to find that it has no jurisdiction to decide exemption requests. However, there are many instances in which the Board does decide that very question.
First, the Board determines whether a property is exempt from taxation on some motions under section 40.1 of the Act. That section permits the Board to create appeals if it finds that there are palpable errors in the assessment roll. In Municipal Property Assessment Corporation Region 15 v Brampton (Corporation of the City), 2020 CanLII 1382 (ON ARB), the Board found, at paragraph 16, that the errors in that case were of conspicuous magnitude because “the property was residential when it should have been exempt.” The Board determined that cemeteries are exempt and therefore that the errors in classifying a cemetery as residential were palpable errors. That is, the Board made an exemption determination.
Second, the Board frequently issues decisions on consent. In some of those cases, the Board orders an apportionment of a property, with part of the property being exempt. The Board does not refuse to order that part of a property be apportioned as exempt. Rather, it determines the current value of a property and orders that a percentage be exempt based on MPAC’s recommended apportionment. Examples of decisions of this nature are: Zimmerman v Municipal Property Assessment Corporation, Region 23, 2020 CanLII 94357 (ON ARB) and Cooper v Municipal Property Assessment Corporation Region 02, 2015 CanLII 69918 (ON ARB). Consent of the parties does not grant jurisdiction to the Board, yet the Board orders that portions of properties are exempt.
Third, the Board has determined exemption under section 40 appeals when it is alleged by MPAC or a municipality that an exemption has ceased. In White v Municipal Property Assessment Corporation, Region 06, 2019 CanLII 5474 (ON ARB), the Board determined that the correct classification of the entire property was residential and that a portion of the property that was previously exempt, was no longer exempt. The Board found at paragraph 26: “With the finding of the current use as residential, s. 3(1)28 no longer applies, because the Subject Property is no longer operating as a hydro-generating station.”
Another clear example of the Board determining exemption on a section 40 appeal is London (City) v 8768013 Canada Ltd., 2016 CanLII 19402 (ON ARB). In that case, the City appealed an assessment that apportioned part of the property to the residential class and part as an exempt place of worship. The main issue in that case was whether the place of worship portion was exempt. As the Board stated at paragraph 5, the city appealed “chiefly to amend the classification of the church building to commercial”. The Board determined that “the place of worship ceased to have an exempt status when it was purchased by [the numbered company], which is neither a charitable organization nor a church or religious organization”. In both White and 8768013 Canada Ltd., the Board determined that an exemption no longer applied.
Fourth, pursuant to paragraph 357(1)(c) of the Municipal Act, 2001, upon application to a municipality, the municipality may refund a part of taxes paid if a property became exempt from taxation during the year or during the preceding year after the return of the assessment roll for the preceding year. If the municipality denies such an application, the applicant may appeal the decision to the Board under subsection 357(7). The Board may make any decision that council could have made including whether a refund should have been made because a property became exempt. In such a scenario, the Board is required by statute to determine exemption.
That is precisely what occurred in Daniels LR Corporation v Brampton (City), 2016 CanLII 63437 (ON ARB). The Board in Daniels explicitly held that it had jurisdiction under the Municipal Act to determine the amount of a refund based on the finding that a portion of the property was exempt. The case involved land that was subdivided, with portions of the land transferred to the municipality for roads and such. The Board found that a portion of the property was transferred to the municipality on a particular date and determined the amount of the refund owed to the applicant.
In all of those cases, and cases like them, the Board makes an exemption determination. It is difficult to reconcile cases in which exemptions are decided and those in which exemption determinations are not made on the basis that the Board lacks jurisdiction.
The legislature clearly intended for the Board to make exemption determinations under the Municipal Act and it is reasonable that the Board makes exemption determinations in other circumstances. It is our view that the Board ought to be empowered to make exemption determinations. We will explore that issue further in Part 2 of this blog.
NextGenLaw LLP is a leader in Ontario assessment law and has represented numerous clients on exemption applications. We can help you navigate the law to get the best tax outcome for you. Contact NextGenLaw LLP today.
