NextGenLaw's Joe Jebreen and Scott McAnsh highlight appeal judgment's implications for charities
In Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corporation, 2025 ONCA 450, the Ontario Court of Appeal overruled a precedent relevant to affordable housing providers and clarified the test qualifying them for property tax exemptions.
“The legal test in Stamford will allow more charities that assist the poor but do not engage in private fundraising, including many low-income housing providers, to be exempt from paying property taxes,” Joe Jebreen and Scott McAnsh of NextGenLaw LLP wrote in a statement sent to Law Times. They are the appellant's counsel in Stamford.
In Religious Hospitallers of St. Joseph Housing Corp. v. Regional Assessment Commissioner, 1998 CanLII 2943 (ON CA), 42 O.R. (3d) 532 (C.A.), the appeal court interpreted s. 3(1)12 of Ontario’s Assessment Act, 1990, by limiting the eligibility of charitable, non-profit philanthropic corporations for municipal tax exemptions.
Specifically, the Religious Hospitallers ruling required the applicant seeking a tax exemption to establish that it would provide relief for the poor “by some form of endeavour.”
“Religious Hospitallers has been overruled, and its ‘some form of endeavour’ test is confirmed as bad law,” said an article from Dentons Canada LLP.
The appellant in the present case – a charitable, non-profit philanthropic corporation – worked with regional service manager Niagara Regional Housing to provide affordable housing to low-income residents of the City of Niagara Falls.
The appellant applied for a declaration under s. 3(1)12(iii) of Ontario’s Assessment Act, 1990, that the three apartment buildings it owned in the city were statutorily exempt from municipal taxation.
Under this provision, the exemption covered “any charitable, non-profit philanthropic corporation organized for the relief of the poor if the corporation is supported in part by public funds.”
In November 2022 and December 2023, respectively, an application judge of the Ontario Superior Court and the Divisional Court dismissed the appellant’s application upon deeming themselves bound by Religious Hospitallers’ interpretation of the exemption’s requirements.
The Court of Appeal for Ontario allowed the appeal, set aside the application judge’s judgment and the Divisional Court’s order, and found the appellant’s three Niagara Falls properties exempt from municipal taxation for the 2021 tax year under s. 3(1)12(iii) of the Assessment Act.
The appeal court agreed with the appellant that it should overrule Religious Hospitallers. The appeal court determined that this precedent failed to bring interpretative clarity and consistency, as seen by the subsequent cases, which tended not to treat it as authoritative.
The appeal court said the error undermined the objective and intent of s. 3(1)12(iii) and limited the provision’s ambit by introducing the foreign element of an endeavour. The appeal court added that correcting this error would promote certainty in the future and improve the justice system’s integrity.
According to the appeal court, to qualify for an exemption under s. 3(1)12(iii) of the Assessment Act, an applicant should:
Regarding the third requirement, the appeal court explained that (a) the subject property’s primary purpose or use should be to relieve the poor, and (b) the applicant should operate at least partly to relieve the poor.
The appeal court noted that, while the applicant’s corporate objects could inform (a) and (b), they were not determinative. The appeal court added that there should be an element of economic deprivation or need on the part of the beneficiaries.
The respondents accepted that the appellant met most of the requirements of s. 3(1)12(iii). Specifically, they conceded that the appellant was a charitable, non-profit philanthropic corporation partly supported by public funds.
The respondents also accepted that the appellant owned, used, and occupied the three properties; relieved poverty; and served the poor. The only question was whether the appellant was “organized” to relieve the poor.
The appeal court ruled that the appellant was a charitable, non-profit philanthropic organization – organized for and in fact serving the poor – that complied with the requirements of s. 3(1)12(iii).
The appeal court held that the appellant, which aimed to address economic deprivation or need, fulfilled the legislative purpose of relieving the poor. According to the appeal court, to achieve that purpose, the appellant:
The appeal court found that the appellant, which earned modest investment income and secured grants and funding for renovations and repairs, did not need any separate endeavour or evidence of private fundraising.
The appeal court noted that the application judge had determined that the tenants were poor, and the appellant served the poor as the legislation intended.
According to Dentons’ article, thanks to this recent appeal ruling, “[a]ffordable housing providers considering applying for a property tax exemption can now assess their prospects of success with a greater degree of certainty.”
The firm’s article added: “One can hope that the legacy of the Stamford Homes appeal will be more funds available to affordable housing providers to put toward their operating expenses, contributing to higher quality accommodation for their tenants, and a larger stock of affordable housing across Ontario.”
