Eat, Pay, Love – Court Of Appeal Declines To Find Tai Chi Classes Qualify As "Worship" Under The Assessment Act.

Death and taxes are usually seen as inevitable. Any exemptions from taxation are highly sought after with even religious organizations aggressively seeking to claim and maintain exempt status.

In one such recent case, Fung Loy Kok Institute of Taoism v. Municipal Property Assessment Corporation, the Court of Appeal for Ontario ("ONCA") upheld an application judge's decision that not all of the religious organization's buildings are exempt from paying property tax.

Background

The Fung Loy Kok Institute of Taoism ("FLK") is a religious organization that owns several properties across Ontario including 10 buildings on a 100 acre site and 19 "satellite sites". The satellite sites were primarily used by the FLK to conduct Tai Chi classes, which are integral to the FLK religion. The FLK brought an application to have the satellite sites declared as "places of worship" and therefore exempt from property tax under the Assessment Act. The Municipal Property Assessment Corporation ("MPAC") objected on the basis, in part, that there was no difference between the Tai Chi classes taught at the FLK satellite sites compared to Tai Chi classes taught at non-religious studios. The application judge concluded that the FLK's satellite sites were not "places of worship" in large part as the individuals attending these classes were not worshipping through Tai Chi. The FLK appealed the decision to the Divisional Court which upheld the application judge's finding.

What Types of are Properties Exempt From Paying Property Tax?

Under the Assessment Act, all land in Ontario is subject to property tax unless it qualifies for an exemption specified within the Act. A variety of properties are exempt from property tax including land on which universities, hospitals, and airports operate, as well as some lands owned or leased by charities religious organizations. If the owner of a property believes the property qualifies to be exempt from property tax, the owner can apply to MPAC for a property tax exemption.

Specifically, for religious organizations seeking to have buildings they own be exempt from property tax, the issue in the request for exemption is property is primarily used for or in connection with worship.

The Court of Appeal Upholds the Application Judge's Decision

At the ONCA, FLK argued that the application judge adopted too narrow of a definition of the "worship". FLK relied on two arguments: first, that the religious nature of a particular practice must be determined subjectively based only on whether the individual's belief is honestly and sincerely held; and second, whether the Tai Chi classes are "worship" should be determined by considering how these classes were subjectively perceived by the FLK's Directors, rather than the class participants.

The ONCA accepted the FLK's first argument that the individuals who subscribe to FLK's religious views sincerely believed that their practice of Tai Chi at the satellite sites was a religious or spiritual act and therefore qualified as "worship" under the Assessment Act.

The ONCA rejected the FLK's second argument and held that the subjective perceptions and beliefs of the Tai Chi class participants were important in determining whether the Tai Chi classes are "worship" under the Assessment Act. The perception of a participant's actions was found to be relevant to the question as to whether a person performing an activity is doing so for a religious purpose. The ONCA reviewed the evidence considered by the application judge which included:

• The FLK's Tai Chi classes appeared identical to secular Tai Chi classes provided by non-religious organizations;
• The classes are run by volunteers and not religious leaders or teachers;
• The beginner Tai Chi instruction focused solely on the practice and memorization of the Tai Chi movements, without any element of prayer or chanting;
• Participants were not required to be Taoists or have any Taoist knowledge; and,
• The FLK was using the introductory classes to encourage its participants to take up the practice of Tai Chi and adopt Taoist beliefs.

Based on the evidence, the ONCA concluded that it was open to the application judge to find that the persons participating in the Tai Chi classes were not worshipping through Tai Chi such that the satellite sites did not qualify for the tax exemption.

Implications of Fung Loy Kok Institute of Taosim:

The ONCA's decision in Fung Loy Institute underscores the complexities surrounding property tax exemptions for religious organizations. It illustrates the legal distinctions between religious practice and activities that may appear similar, but lack the essential elements to be considered "worship" making the building a "place of worship" and exempt under the Assessment Act. The ruling highlights the importance of religious organizations considering the specific activities at each of their properties to see whether the properties qualify for a property tax exemption and either restructuring their use of the building to ensure exempt status or ensuring in their financial planning to be able to pay the then inevitable tax.