Tax Court of Canada


Goods and Services Tax


Appearance of building not necessarily relevant to whether substantially all of building replaced

Property owner and his spouse made considerable renovations to their residential property. Minister of National Revenue rejected owner’s application claiming GST new housing rebate under Excise Tax Act, on basis that works were not sufficient to constitute “substantial renovation” of “all or substantially all of building”. Owner appealed. Appeal dismissed. While owner argued that building “looked like new” after renovation, appearance of building to naked eye was not necessarily relevant to test whether, based upon totality of renovations with careful listing of elements to be included, all or substantially all of building had been removed or replaced. Owner’s renovations, involving removal of internal walls to combine kitchen, dining area and living room into single “great room” as well as drywall repairs, repainting and re-fixturing in remaining rooms, did not match up even to test most favourable to granting of rebates. At best, only half of rooms of house were substantially renovated. Most walls, unless torn down permanently or newly constructed, were “re-smoothed” and not removed. Renovation did not transform building beyond resemblance from its original state. CRA’s analysis was sound, generous and fair, applying three methodologies and giving owner benefit of most favourable calculation that 63 per cent of surfaces had been renovated. Owner’s assertion that drywall should be excluded from consideration or calculation could not succeed, as it was integral to walls and served primary function as modern material used as cladding placed upon vertical studs to be painted, papered or covered decoratively. Any finding in precedent concerning drywall’s inclusion in calculation was obiter and fully reconcilable with this approach.

Whittall v. The Queen (2017), 2017 CarswellNat 5885, 2017 CarswellNat 6264, 2017 TCC 212, 2017 CCI 212, Randall S. Bocock J. (T.C.C. [Informal Procedure]).

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