Hole v. The Queen, docket 97-2703-GST-I (Informal Procedure)

Date: 19980430

Docket: 97-2703-GST-I

BETWEEN:

DONALD S. HOLE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent

Reasons for Judgment

Beaubier, J.T.C.C.

[1] This appeal pursuant to the Informal Procedure was heard at Penticton, British Columbia on April 22, 1998. The Appellant was the only witness.

[2] The Appellant filed a claim for a GST rebate of $1,324.13 respecting renovations to his home at Penticton. The claim was filed on October 7, 1996 and denied on February 17, 1997. He appealed.

[3] The renovations were to a bungalow occupied by the Appellant and his wife so as to enable his mother-in-law to live with him.

[4] The entire basement was gutted and redone, including the furnace and duct work and the basement plumbing fixtures and the stair well. This included the bedroom, a recreation area and a bathroom. It totalled 50% of the entire house area.

[5] On the main floor the entire kitchen and dining area was gutted and redone, one of three bedrooms was gutted to the studs and redone, the living room was opened up and redone, removing two walls and replacing one. One wall was replaced in the hallway and railings were installed. The upstairs bathroom was redone and new fixtures were installed. New hardwood was installed throughout the main floor and the remaining rooms and the hallway were redone. New closet doors and windows were installed throughout. In addition a new hot tub, patio and shed were built outside the house.

[6] Thus of six rooms upstairs, four were redone in their entirety, of which three were gutted and the hallway was replaced.

[7] Each floor had 1,400 square feet. This does not include the additions made during renovation.

[8] The original assessment assumed that the house was a mobile home. It did not count the basement at all.

[9] The question is whether the work done constituted a "substantial renovation" of a residential complex as defined in subsection 123(1) of the Excise Tax Act. The definition reads:

"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;

[10] The Appellant renovated 50% of the house within the foregoing definition by means of the basement work. On the main floor the kitchen, dining area, the living room, one bedroom, the hallway and the bathroom were completely renovated. Two bedrooms were not. Windows and the floor surfaces were replaced. The kitchen and bathroom work, in terms of quantity, nature and expense, were very substantial; in essence, everything was replaced but the kitchen plumbing fixtures.

[11] The Appellant's family moved from one floor to the other while renovating and moved out altogether for a month while the work was done.

[12] The question is whether, other than the foundation, exterior walls, interior supporting walls, floors, roof and stair cases, "essentially" or "really" all of the residential complex was replaced.

[13] The assumptions describe the cost as being $75,000. From the pictures in Exhibit A it appears that the Appellant's family did some of the labour. The actual value of the home after the renovations did not increase by a large percentage. However that is not a criterion in the definition. Nor is an exact square footage percentage set out in the definition. Rather it is a question whether, within the limits of the definition, substantially all of the original interior was removed or replaced. In the Court's view it was.

[14] The appeal is allowed.

[15] The matter is referred to the Minister of National Revenue for reconsideration and reassessment on the basis that the claim for a rebate of Excise Tax in the amount of $1,324.13 is to be granted to the Appellant.

[16] The Appellant is awarded costs respecting his disbursements for the appeal which are fixed in the amount of $50.

Signed at Ottawa, Canada this 30th day of April, 1998

"D.W. Beaubier"

J.T.C.C.