Property tax exemptions pursuant to Ontario's Assessment Act1 have been gaining attention as a means for affordable housing providers to help address the province's housing crisis.
In an earlier insight, we described how the state of available funding was driving affordable housing providers to consider pursuing property tax exemptions, and discussed Stamford Kiwanis Non-Profit Homes' momentous appeal before the Court of Appeal for Ontario.
On June 20, 2025, the Court of Appeal released its decision, allowing the appeal in the Stamford Kiwanis Non-Profit Homes' case, and providing helpful clarity on the burden affordable housing providers need to meet to secure a tax exemption under the Act.2
Specifically, the panel of five appellate judges unanimously refuted the argument that affordable housing providers must demonstrate "some form of endeavour" in order to qualify as an entity "organized for the relief of the poor" under s. 3(1)12(iii) of the Act. What stands is a clearer test that many affordable housing providers can meet.
This article provides an overview of the Court of Appeal's decision, as well as the current state of the law.
- Background to the Stamford Homes decision
The statute
Section 3(1)12(iii) provides that "[a]ll real property in Ontario is liable to assessment and taxation, subject to" exemptions from taxation, including for "[l]and owned, used and occupied by ... any charitable, non-profit philanthropic corporation organized for the relief of the poor if the corporation is supported in part by public funds."
As per the wording of s. 3(1)12(iii), the appropriate test is as follows:
- Does the applicant own, use, and occupy the land?
- Is the applicant a charitable, non-profit philanthropic corporation?
- Is the applicant organized for the relief of the poor?
- Is the applicant supported in part by public funds?
The stakes
The resort to s. 3(1)12(iii) has become increasingly popular as the funding framework for affordable housing in Ontario has evolved. Generally speaking, affordable housing funding has shifted from the federal government to the province, and then to municipalities. The prevailing approach has left many affordable housing providers struggling for funding.
Given that affordable housing is, after all, clearly for relief of the poor, affordable housing providers are turning to s. 3(1)12(iii) to preserve the cash flow they need to continue their work, and maintain and increase the province's affordable housing stock.
The decisions below
The appellant, Stamford Homes, is an affordable housing provider. It owns three multi-unit residential properties with a total of 107 residential units, the majority of which it rents to low-income tenants who pay rent set below the market average, including rent geared to income. Stamford Homes works with Niagara Regional Housing and contracts a for-profit property management company to take care of the day-to-day management of the properties.
Stamford Homes applied to the Superior Court of Justice for an order declaring that its three properties are exempt from municipal taxation pursuant to s. 3(1)12(iii). The Municipal Property Assessment Corporation (MPAC) and the City of Niagara Falls opposed the application.
The application judge dismissed the application,3 finding that he was bound by a decision relied upon by the respondents, Religious Hospitallers of St. Joseph Housing Corp. v. Regional Assessment Commissioner (Religious Hospitallers).4Religious Hospitallers provided, crucially, that "organized for the relief of the poor" means "that it would be the corporation itself, by some form of endeavour of the corporation, which would provide the relief involved."5 The application judge found that, in Stamford Homes' case, "some form of endeavour" was lacking.
The Divisional Court did not find a reversible error in the decision below and dismissed Stamford Homes' appeal.6
In Religious Hospitallers, the Court of Appeal for Ontario denied an application for a property tax exemption where the applicant "did very little" – it did not raise its own funds, it outsourced property management for a fee, it purchased the property with financing and paid that financing with public funds, and its tenants and the government bore the cost of its operations.7 Both the application judge and the majority at the Divisional Court were unable to distinguish that case from the circumstances of Stamford Homes' application.
In both appeals, Stamford Homes argued that Religious Hospitallers was wrongly decided, as the court relied on an outdated understanding of interpretive principles for taxation legislation – namely that such legislation has a single purpose: raising money to meet government expenditures. Instead of the "some form of endeavour" test, Stamford Homes argued for the application of the "part purpose" test from the Court of Appeal's decision in London (City) v. Byron Optimist Sports Complex Inc., namely that "there must be an element of economic deprivation or need, the relief from which is a part of the purpose of the institution claiming the exemption."8
2. A unanimous decision to pull back from the cliff edge
In his concurring reasons in the Divisional Court decision, Schabas J. stated that he agreed with the majority, but "this result is driven by what I regard as an unsatisfactory state of the law." Religious Hospitallers, he wrote, "needs to be revisited."9 The Court of Appeal answered that call, granting leave with the rare decision to sit a panel of five judges to consider whether to overturn the precedent.
The overarching issue before the Court of Appeal was whether s. 3(1)12(iii) was available to Stamford Homes. To answer this, the Court of Appeal had to determine whether Religious Hospitallers should be overruled.
In a passage included in the Court of Appeal's decision, Lord Denning once wrote that "[t]he doctrine of precedent does not compel your Lordships to follow the wrong path until you fall over the edge of the cliff."10 The Court of Appeal recognized that Stamford Homes' appeal was an opportunity to avoid such a calamity.
Religious Hospitallers, the Court of Appeal determined, was wrongly decided as that decision (1) failed to apply the proper approach to the interpretation of tax legislation (the dual purpose approach); (2) failed to apply applicable precedent (which used the part purpose test); (3) undermined the legislative intent of s. 3(1)12(iii), being relieving poverty; and (4) introduced the vague and unworkable endeavour requirement.
Having found the decision to be wrongly decided, the Court of Appeal decided that it should be overruled. The Court of Appeal observed that Religious Hospitallers had "largely been ignored as an authority for about 25 years, and the soundness of its holding has been questioned by lower courts."11 Moreover, the impact of the decision detracted from the purpose of s. 3(1)12(iii), which is "to aid charitable, non-profit philanthropic corporations organized for — or put differently, aimed at — the relief of the poor."12
The proper test under s. 3(1)12(iii) was not "some form of endeavour," but rather a two-pronged query asking whether the primary purpose or use of the property is relief of the poor, and whether the corporation operates at least in part for the relief of the poor (this test is discussed in greater detail below). The Court of Appeal found that Stamford Homes' actions demonstrated that it was organized for – and was in fact – serving the poor, and that the properties in question were primarily used and occupied to relieve poverty.
As the respondents conceded that Stamford Homes satisfied the other elements of s. 3(1)12(iii), the Court of Appeal found that it met the requirements for a tax exemption under that provision. The Court of Appeal ordered that the subject properties be exempt from municipal taxation for the relevant tax year, and that necessary adjustment be made to the assessment rolls.
The principal impact of this decision arises from the overruling of Religious Hospitallers. With that, the "some form of endeavour" test is relegated to the doctrinal graveyard, and in its place the panel affirmed and clarified a test looking at the purposes of the applicant and the relevant property.
3. The test for "organized for the relief of the poor"
The Court of Appeal's decision brings much-needed clarity to the test under s. 3(1)12(iii). The Court of Appeal recognized that the governing test for "organized for the relief of the poor" is a combination of the part purpose and primary purpose tests.
The former has been articulated as "there must be an element of economic deprivation or need, the relief from which is a part of the purpose of the institution claiming the exemption."13 This component is concerned with the applicant seeking the exemption.
The Court of Appeal adds that "an applicant would still have to establish that the primary use of the property for which the exemption is sought is to pursue relief of poverty."14 This component is concerned with the property or properties for which exemption is sought. The question requires "an objective determination of the principal purpose for which the land is used and occupied."15
So, to secure an exemption under s. 3(1)12(iii), an applicant must –
- own, use and occupy the land;
- be a charitable, non-profit philanthropic corporation;
- be organized for the relief of the poor. This means (a) the primary purpose or use of the subject property is relief of the poor, and (b) the corporation operates at least in part for the relief of the poor. The corporate objects may inform (a) and (b) but are not determinative. There must be an element of economic deprivation or need on the part of the corporation's intended beneficiaries; and
- the applicant must be supported in part by public funds.16
The court was clear in its conclusion that demonstrating some form of endeavour has no place in the analysis.
Conclusion
The Court of Appeal has resolved ambiguity in the test for property tax exemptions for affordable housing providers and dispelled a troublesome precedent. Religious Hospitallers has been overruled, and its "some form of endeavour" test is confirmed as bad law. The Court of Appeal affirmed and articulated the test for "organized for the relief of the poor" under s. 3(1)12(iii) as being whether the primary purpose or use of the subject property is relief of the poor and whether the corporation operates at least in part for the relief of the poor.
Affordable housing providers considering applying for a property tax exemption can now assess their prospects of success with a greater degree of certainty. There is still an evidentiary burden that must be met, and it remains to be seen whether MPAC and municipalities will be more willing to resolve matters informally or more promptly. 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.
Footnotes
1. R.S.O 1990, c. A.31. ↩
2. Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corporation, 2025 ONCA 450 ("Stamford Homes (C.A.)").↩
3. Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corporation, 2022 ONSC 6392 ("Stamford Homes (S.C.)").↩
4. (1998), 42 O.R. (3d) 532 (C.A.).↩
5. Religious Hospitallers, at p. 8.↩
6. Stamford Kiwanis Non-Profit Homes Inc. v. Municipal Property Assessment Corp, 2023 ONSC 6625. ("Stamford Homes (Div. Crt.)").↩
7. Stamford Homes (S.C.), at para. 54.↩
8. (1983), 23 M.P.L.R. 10.↩
9. Stamford Homes (Div. Crt.), at para. 85.↩
10. Stamford Homes (C.A.), at para. 36; quoting David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Company (2005), 76 O.R. (3d) 161 (C.A.).↩
11. Stamford Homes (C.A.), at para. 86.↩
12. Stamford Homes (C.A.), at para. 86.↩
13. Stamford Homes (C.A.), at para. 87, quoting Byron Optimist, at p. 11.↩
14. Stamford Homes (C.A.), at para. 89, citing Buenavista on the Rideau v. Ontario Regional Assessment Commissioner, Region No. 2 (1996), 28 O.R. (3d) 272 (Div. Ct.), at p. 276.↩
15. Stamford Homes (C.A.), at para. 89, quoting The Diocese of Toronto Camps (Anglican Church of Canada) v. Municipal Property Assessment Corp. (2004), 246 D.L.R. (4th) 170 (Ont. C.A.), at p. 174.↩
16. Stamford Homes (C.A.), at para. 94.↩
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