"I don't have to pay any Ontario property tax!" (Yeah, you probably do)
The internet is full of scams. This is not some exciting revelation - we all know this. Yet, in the area of taxes, many still fall for promises that are too good to be true. Sometimes these scams even relate to property taxes.
One type of scam which has been around for ages has come to be known as an OPCA Scam - Organized Pseudolegal Commercial Argument. Have you ever heard a supposed ‘guru’ explain that under some old law you don’t have to pay certain taxes? Maybe you have been told that in Canada income tax is unconstitutional; that it was only a temporary measure to pay for World War 1, and if you refuse to pay it the government can’t force you to. (There are plenty of people in prison who would beg to differ!)
Many of these ‘gurus’ sound very persuasive; they use a lot of legal sounding terminology, are well read in arcane and obsolete laws, and often present with tremendous confidence. This, combined with the prospect of saving significant money, can be very tempting. It was tempting enough that a taxpayer from Ajax Ontario recently tried such arguments before Ontario’s Assessment Review Board. (Kuleba v Municipal Property Assessment Corporation, Region 13, 2019 CanLII 47986 (ON ARB))
The arguments put forth did not address any real issues of assessment. The decision doesn’t even reference any evidence of value from the appellant. He argued that he had a constitutional right to be free from taxation. He argued that the Board did not have jurisdiction. He insisted that he was only subject to common law. But nothing was advanced that actually related to to the property tax assessment of his property.
The Board referenced an Alberta case - Meads v Meads (http://canlii.ca/t/fsvjq)- in which Associate Chief Justice J.D. Rooke methodically takes down the OPCA arguments one by one. No doubt many judges and board members are happy he took the time. The decision is an absolute textbook on how to recognize OPCA arguments, and why they are nonsense.
The Kuleba case is not the only time such specious arguments have been used in an attempt to evade property taxes. Another tactic which has been used in the US is the argument that if you can trace the ownership of your property back far enough, then you don’t have to pay property taxes. This is also nonsense. Forbes author Peter J. Reilly did an article on this several years ago, and found several US cases where, despite the best efforts of the litigants, they had to pay property taxes. Big surprise. Such arguments are popular on YouTube, and several supposed experts are working to convince Ontario Property Tax payers that this is a legal way to avoid paying property taxes. It is not. If you refuse to pay your property taxes long enough the municipality will probably sell your land. (I guess then you wouldn’t be paying taxes on it anymore, so that’s something…)
Michigan State University also published an article which in detail shows why the “my land is patented so I don’t have to pay property tax” argument doesn’t hold up, at least in the US. My favorite quote from the article: “The short answer is the arguments of this genre are nonsense.” The arguments given in the article showing how absurd the argument is hold up pretty much anywhere.
Generally the strategy is to trace back ownership of the property all the way back to the original land grant from the government. Since such government land is not generally subject to property tax, the argument goes, you are tax free. The step the OPCA litigants are missing is that the government has a right to sell land, and once land is sold to a private party, it is now like any other private land - subject to property tax, just like everyone else’s property. An opinion by the Michigan Attorney General states that land sold by the state “becomes in all respects subject to the local laws of the state, like the great mass of other property.” So what if at some point your land was sold by the government. The fact that it was sold makes it plain old land, like all the rest. All your sales records prove is that the land is no longer government land.
Unlike attempts to evade income tax, such a failed property tax scheme is unlikely to land the appellant in jail. What will happen though is real opportunities will be missed. The ARB (and courts, for that matter) are quite united on this point - they will not consider such arguments. Any appeal founded on OPCA reasoning will be dismissed, and even real opportunities will be ignored. In the above noted case MPAC (Ontario’s assessment agency) actually believed that a reduction was in order, but the Board simply dismissed the appeal. Had the taxpayer shown up to the hearing and said nothing, his taxes would likely have gone down. Since he insisted on putting forth this nonsensical argument, he was punished and denied any reduction.
The decision put forth in this case (Kuleba) will no doubt be the precedent applied by all future Ontario Assessment Review Board panels to cases of this sort. Note the language used in the decision (emphasis mine) -
[26] The courts have been clear that the arguments put forward by OPCA litigants should not be considered on their merits. They are plainly wrong, and largely nonsense, so any time spent on those arguments is wasted adjudicator time. Time spent on OPCA arguments is time that is taken away from more serious claims. As noted by Justice Myers in Jarvis v Morlog, 2016 ONSC 4476 (CanLII), at paragraph 3, “not another moment of judicial resources or party expense should be invested on OPCA claims. They should be summarily nipped in the bud with reference to Meads v. Meads and no more.” That is the appropriate remedy, once an OPCA litigant has been identified. OPCA claims should be dismissed as an abuse of process.
Many people feel that taxes in general are too high. Many others feel that their taxes in particular are too high. There are many legitimate strategies to making sure that your Ontario property taxes are at least fair under existing law. If someone tells you that you don’t have to pay any taxes at all, be suspicious. Maybe get a second opinion.
References:
Kuleba v Municipal Property Assessment Corporation, Region 13, 2019 CanLII 47986 (ON ARB), <http://canlii.ca/t/j0l4j>
Meads v. Meads, 2012 ABQB 571 (CanLII), <http://canlii.ca/t/fsvjq>
https://www.canr.msu.edu/news/how_land_patents_relate_to_planning_zoning_and_property_taxes