Confusion surrounds new non-profit tax exemption bylaw

‘We’re very embarrassed about it. We are in dire straits,’ legion office manager says

John Graham, office manager at the Royal Canadian Legion, said the legion is in debt to the city already, and having to pay property taxes on the Cadet Hall and daycare isn’t going to make it any easier. (Photo by David Venn)

By David Venn
Local Journalism Initiative Reporter

Updated on Friday, Oct. 14, 2022 at 5:15 p.m.

The prospect of a longtime charity in Iqaluit facing more debt in this upcoming tax year was unsettling news for John Graham to hear Wednesday afternoon.

The Royal Canadian Legion already owes the City of Iqaluit about a half-million dollars for property taxes on its restaurant-bar, said Graham, the legion’s office manager. Having to start paying property tax on its other two facilities will be just one more bill to add to the heap.

“We’re very embarrassed about it. We are in dire straits with the City of Iqaluit with respect to the payment of back taxes,” said Graham, who has been a volunteer with the legion since 1984 — even coming out of retirement in November to help balance its finances.

At Tuesday’s council meeting, the city’s acting chief administrative officer Rod Mugford identified the properties owned by charities and non-profit organizations that will be fully or partially exempt from property taxes.

The legion’s Cadet Hall and daycare weren’t on that list.

The Uquutaq Society and YWCA Agvik Nunavut’s shelters won’t have to pay property tax. The Iqaluit Pentecostal, Jehovah’s Witnesses and Anglican Bishop of the Arctic’s churches will be required to pay 25 per cent of their total property tax bill.

This exemption will last for the next four tax seasons, after which they will have to reapply.

City spokesperson Geoff Byrne said the city is unsure of how much revenue it will lose through the exemptions, as it is working out the rates for the 2023 tax season.

The city switched to an application format for assessing non-profits and charitable organizations in April 2022. Applicants need to show the city they have a financial need for tax relief and that the organization provides a necessary community service.

The deadline for this year’s round of applicants closed in June and Mugford said on Tuesday that no applications for tax exemption were denied.

There were 13 organizations exempt from paying tax on portions of their property that were used for community service under the city’s old bylaw No. 858.

Only two organizations on that list remain under the new one, bylaw No. 935.

Byrne said the city reached out recently to the organizations it thought would have applied for the exemption, but hadn’t, in order to give them the chance to apply in time for the 2023 tax season.

Nunatsiaq News tried to speak with several of the organizations that were not on the city’s list for a tax exemption for the upcoming year.

Rev. Daniel Perrault, of the Catholic Church, and Association des francophones du Nunavut executive director Christian Ouaka declined to be interviewed.

The legion’s revenue began to decrease when the Beer and Wine Store opened its doors in Iqaluit in September 2017. Graham said in that first year, its sales were down nearly $3 million.

And then in 2020, the pandemic hit.

In Graham’s words, the money-making part of the legion “died” over that time.

“We’re doing everything we can here to try and refinance, but it’s not easy trying to refinance when you’re coming off a two-year government-mandated closure,” he said.

“We’ve got no problem with that because we’re great law-abiding people here at the Royal Canadian Legion — not criticizing anybody. It’s just bloody unfortunate the whole thing.”

The legion, being a charity, has put money from its sales and membership fees back into the community. It donated $600,000 for the Arctic Winter Games Arena in 2001 and helped fund construction of the Elder’s Qammaq, Graham said.

“But at the end of the day, unfortunately, you don’t get any credit for that. I mean, I understand that. I’m playing the sympathetic card, I guess,” he said.

Graham said the city told him the legion had to reapply for a property tax break this year.

He asked for a week’s extension of the deadline — set for June 30 — but said he never heard back from the city.

“We’ve got to get over there and meet with these fine folks at the city.”

Islamic Society of Nunavut president Syed Asif said his organization didn’t receive notice from the city that it would have to apply for its tax exemption, and that’s a cause for worry.

“We, all of the churches and religious places, they’re run by donation,” Asif said. “Certainly, it’s going to be a huge task to collect all that money.”

The Islamic Society runs a food bank every second Saturday out of its Masjid, located on the Road to Nowhere. Asif said paying for that service, insuring the building — which costs about $10,000 each year — and now having to pay property taxes will be a hit to the non-profit’s finances.

“[Paying for insurance] and then running the food bank and then paying the bills for fuel and everything — it’s going to be a tough order,” he said.

Nunatta Sunakkutaangit Museum, as it stands, will have to pay property taxes. (Photo by David Venn)

In Nunatta Sunakkutaangit Museum’s case, manager Jessica Kotierk said she sent in an application and received confirmation from the city that it had received it.

“That’s the last thing I’ve heard about it,” Kotierk said.

The museum is an Iqaluit-based charity that provides the community free access to education and a space for other organizations or artists to hold exhibits, workshops or other events.

Uquutaq Society executive director Laurel McCorriston said if the society saves money on paying property taxes, the rent of their 11 affordable housing units would go down. (Photo by David Venn)

Kotierk’s next step will be reaching out to the city to ask why her application wasn’t processed.

Uquutaq Society, which received a tax exemption for its shelter at Building 1077, did not get the same treatment for its affordable housing building at 1079.

Executive director Laurel McCorriston said she sent in two separate applications for the buildings, but only one was approved.

That’s because Nunavut law doesn’t allow for residences to be exempt, Byrne said.

McCorriston said whatever money the society saves from not paying property taxes would be passed on to residents.

“Anything that decreases the cost of running the affordable housing, decreases the cost of rent,” she said.

“Because it’s a non-profit, the board decided before we opened this building that … we’re not making any profit off of it, even though we could.”

Property tax last year cost about $30,000 on the affordable housing building, McCorriston said, adding she had hoped to get a 50 per cent reduction.

Correction: This article was updated from an earlier version to correct that Nunavut law does not allow residences to be exempt from property taxes.

 

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(12) Comments:

  1. Posted by Make Iqaluit Great Again on

    For over thirty years, the Legion along with the Frobisher Inn had a virtual monopoly over the sale and consumption of alcohol in Iqaluit. Every weekend during that era, the Legion had as much business as the most popular bars in southern Canada. Over that thirty year period, the Legion made millions of dollars a year due the monopoly they enjoyed. As a result, I am shocked that they have an outstanding tax bill of half a million dollars, and I have no sympathy whatsoever for their situation. What I say to the Legion is that you have done extremely well by our city so pay what you owe and quit whining!!

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    • Posted by Make Legion great again on

      The RCL had to donate a lot of their profits as they’re a non-for-profit organization. Unfortunately for them, they also gave a lot of money to the Nova Scotia legion to help them out of their money troubles. The Iqaluit legion should have had something in place as a “just in case.” Or maybe all those local organizations that they donated money to can help them out in return..but that’ll never happen.

      Another thing to remember is that the Iqaluit legion have staff who earn a living there. It’s too bad that people seem to forget about them. Including their own board members and management. Where will they go if this place has to shut its doors?! There’s a lot of Inuit staff there so this is very unfortunate situation. I feel for them.

      Maybe someday, a younger, competent generation can push out the older generation off the board and this place can run properly again. AGM should be coming up soon folks!

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      • Posted by Legionnaire on

        to address some of the points in the previous repl. The RCL as a not for profit charitable organization can not as you say “put something aside just in case”.
        They are mandated by law to return any profits back to the community.

        The executive and Management are very aware of their Inuit staff and are working to ensure they receive the hours and job stability they deserve.

        Lastly i have attended some of the regular meetings and they always request that interested parties look to volunteering with the executive to Ladies auxiliary. so feel free to stand up and join rather then complain.

        Respectfully submitted.

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        • Posted by Seems like years of non-payment on

          If you’re in the know, can you tell us how the legion ended up owing the city around $500k?

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          • Posted by Bert Rose on

            When the GN were sucked in to openning the beer and wine store, suddenly it was cheaper to buy beer and wine to drink at home than it was to go to the Legion
            The Legion pays the same amount for a case of beer as an individual
            Then add enforced closures with no revenue because of Covid and there is why they have such debt

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            • Posted by Make Iqaluit Great Again on

              So the GN, in your words, was “sucked in” to making a decision to give individuals the freedom to purchase beer locally to enjoy in the privacy of their own homes, as opposed to having to pay big premiums to either the legion, some other bar or the airlines?? You think that was a poor policy decision to take away the Legion’s monopoly? You think the purpose of government was to protect the legions profits at the expense of personal freedom? My God, what crazy Alice in Wonderland world would you like us to live in? Weird thinking (to say the least)!!

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            • Posted by John K on

              How were they “sucked in”?

        • Posted by John K on

          They do not. Non-profits can and do make profits. Any profit made must be held in trust for use by the organization in the pursuit of it’s purpose or goal. If they had to do whatever it is that you’re claiming then NO non-profit would be sustainable.

          The fact that something this blatantly false has been so vigorously upvoted is troubling.

        • Posted by John K on

          They do not. Non-profits can and do make profits. Any profit made must be held in trust for use by the organization in the pursuit of it’s purpose or goal. If they had to do whatever it is that you’re claiming then NO non-profit would be sustainable.

          The fact that something this blatantly false has been so vigorously upvoted is troubling.

  2. Posted by Northern Guy on

    This bylaw is a mess and has caught up a whole lot of legitimate not for profits. So if City Council values the supports that not for profits provide (excluding the Legion, which is in my view a for profit entity) then Council needs to revisit the policy or it will create significant harm to the community.

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  3. Posted by Anita on

    It is a real shame that it has come to this.
    Over the years, the Iqaluit (and formerly, Frobisher Bay) Legion has donated hundreds upon hundreds of thousands of dollars to Elders, youth, sports, music and other programs in this community, as well as contributing to many, many community events. The BPO Elks and Royal Purple have also made significant contributions to the community. Yes, mostly from profits from the sale of alcohol.
    But I can’t really think of a better use of those profits. Can you?

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  4. Posted by Former member on

    In the past, the Iqaluit legion had the highest profit margins amongst all other legions in Canada. Before the beer and wine store the Legion, Bar, Nova, Nav and Elks had a monopoly for the drinkers of Iqaluit. You can claim your profit margins decreased due to the beer and wine store and COVID. But…..
    As the younger generation turned legal drinking age, the legion was not appealing. Although they had great prices for the food. The legion really needed renovation. Same old chairs, tables and lights are over 20yrs old. Its dark and unwelcoming. No special cocktails or other gimmicks to get more customers.

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