Citation: 2010 TCC128
Date: 20100305
Docket: 2009-2424(GST)I
BETWEEN:
LOUISE ANN RHODENIZER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1]
This appeal is the
result of a denial by the Minister of Revenue for Quebec (the Minister), within
his mandate to administer the Goods and Services Tax (the GST), the application
for a GST rebate in the amount of $950.73 for a new residential complex or one
that has undergone substantial renovation with respect to a residential complex
located at 78 Frederick Street, Saint-Alphonse de Rodriguez, Quebec. The application
for a rebate was made by the appellant on or around September 4, 2008, and the
Minister’s decision denying the said application was in the Notice of
Assessment bearing the number 84132 9022 RT0001 and dated December 22, 2008.
[2]
The differences between
the parties rests solely on the issue of whether or not the renovation
satisfies the definition of the expression “substantial renovation” for
the purposes of subsection 256(2) of the Excise Tax Act, R.S.C., c.
E-15, as amended, (the ETA). The expression “substantial renovation” is defined
in subsection 123(1) of the ETA as follows:
“substantial renovation” of a residential complex means the
renovation or alteration of a building to such an extent that all or
substantially all of the building that existed immediately before the
renovation or alteration was begun, other than the foundation, external walls,
interior supporting walls, floors, roof and staircases, has been removed or
replaced where, after completion of the renovation or alteration, the building
is, or forms part of, a residential complex;
[3]
According to the
Minister, the residential complex with respect to which the appellant applied for
a rebate did not undergo substantial renovations in terms of the ETA. In her
Notice of Objection, (Exhibit I-1), the appellant indicated that the basement
was completely redone following the work done within an excavation contract
made with contractor, Guilbault Excavation Inc., on October 8, 2007 (Exhibit
A-2). As per the terms of the contract, the work carried out was as follows:
(a)
stripping the complex;
(b)
disassembling existing
foundation;
(c)
excavation for
foundation;
(d)
providing and
installing the sill and foundation including a basement entrance and 4 supports
(for future verandas);
(e)
providing and
installing foundation armouring;
(f)
providing and
installing apertures for basement windows;
(g)
providing and
installing French drains;
(h)
providing and
installing the stone ¾ clear cut inside the foundation and on the drain;
(i)
tarring the foundation;
(j)
providing and
installing adjustable columns;
(k)
providing and
installing a basement shaft;
(l)
providing and
installing polyethylene under the concrete slab;
(m)
providing and
installing a concrete slab; and
(n)
backfilling with only
excavated materials.
[4]
The renovation work the
appellant is claiming for a tax rebate results primarily from the excavation
work described above. The building, which is approximately 30 years old,
sustained significant damage from a natural levee. During the excavation work,
the basement was completely renovated and the appellant and her spouse lived in
the basement.
[5]
In a document dated
April 5, 2009, the appellant provided the following supplementary information
regarding the renovation work to the main floor:
-
changing the bathroom
tiles
-
changing the molding at
the base of the walls;
-
fixing the cracks above
the doors;
-
fixing the cracks over
the windows;
-
changing the outside
door handle;
-
adjusting the inside
and outside doors;
-
painting all the rooms;
-
changing the floor
moldings between the doors;
-
changing the plumbing
in the kitchen and bathroom;
-
changing the toilet;
-
changing the bath
faucet;
-
changing the electric
sockets and switches in all the rooms;
-
changing the kitchen
radiator and thermostat;
-
changing the staircase
and the stair covering;
-
changing the bathroom
window;
-
changing the bathroom
ceiling fan; and
-
redoing the silicone
around the counter in the kitchen.
[6]
During her testimony at
the hearing, the appellant further clarified the work carried out:
-
the staircase and the
basement were complete redone;
-
the exterior siding had
to be replaced;
-
the outside perron,
carport, the path to the main entrance, the asphalt and terracing were redone;
-
the basement entrance
had to be moved;
-
2 new radiators were
installed on the main floor and 4 new radiators in the basement; and
-
inside door frame on
the main floor was changed.
All the rooms in the building were updated, with the
exception of the roof and the cost for all the work exceeded $55,000.
[7]
The Minister
established the assessment on the basis that the bathroom was part of the
significant renovations but that the other renovations were minor, esthetic
repairs, such as applying plaster, moldings or paint, or are not admissible
upgrades, such as the rebuilding of the foundation or replacing the stairs. As
a result, the admissible work carried out by the appellant to her residential
complex did not transform her complex all or substantially all from the way it was before the prior to the
work. As a general rule, the expression “all or substantially all” is interpreted as being 90% or more.
[8]
The work carried out by
the appellant was certainly significant and constituted major renovations, as
per the ordinary sense of the definition. However, Parliament defined the
expression “substantial renovation” in a very restrictive manner as it excludes
work that in theory should be considered as major. Work done to the foundation,
exterior walls, interior support walls, floors, roof and stairs are excluded
from the definition. As a result, it must be determined if the other work
carried out to the building was sufficient enough to consider the building as
being all or substantially all renovated or transformed or almost
completely removed or renovated.
[9]
Even in considering all
the renovation work, including what was done in the basement, I do not believe
that all or substantially all the building was
removed or replaced. With the exception of the basement and the bathroom, the
main floor of the building underwent only esthetic changes.
[10]
The kitchen cabinets
and the counters were not changed but the plumbing in the kitchen was changed.
The rooms on the main floor were not altered; only the doorframe of an interior
door was replaced. Only the electric sockets and switches were replaced and 2
radiators on the main floor were added or replaced.
[11]
The work done to the
foundation, exterior walls and basement stairs are not admissible. The same for
the work to the patio and carport as they are not considered to be a part of
the liveable area. The work on the entrance path, the asphalt entrance and the
terrace are not admissible.
[12]
The cost of the
renovation work is not a criterion for determining whether the work carried out
can be considered a substantial renovation. As a result, I cannot allow the
appellant’s appeal.
[13]
The appeal is
dismissed.
Signed at Ottawa, Canada, this
5th day of March 2010.
Réal Favreau
Translation
certified true
on this 11th day
of June 2010.
Bella Lewkowicz,
Translator
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