Words and Phrases - "addition"

The taxpayer, which subleased premises containing “Shells” consisting essentially of foundations, walls and roofs, installed wall and floor coverings and performed electrical, ventilation and plumbing work to make the premises suitable for use in its manufacturing and processing (“M&P”) operations. It took the position that the costs of the property added to the Shells for this work should be included in Class 29 rather than Class 13.

Among other requirements, in order to be a Class 29 property, the above property needed to qualify as a Class 8(b) property (e.g., tangible property attached to a building and acquired for the purpose of manufacturing or processing) and not a Class 1(q) property (a building or other structure including component parts). The Directorate agreed with the taxpayer that a property which otherwise was a Class 13 (leasehold) property could qualify as a Class 8 property (before then being potentially assimilated to Class 29), but went on to indicate that the above alterations to the Shells would be sufficient to deem the taxpayer’s leasehold interests to be a building or other structure, by virtue of Reg. 1102(5)(a)(iii). Regarding Regs. 1102(5)(a)(i) and (ii), it stated:

In light of the meaning of the terms "building" and "structure" in paragraph 1 of IT-79R3, a Shell, which is a structure with walls and a roof, may generally be considered a building or other structure for purposes of subsection 1102(5). Consequently, the Taxpayer is not considered to have erected a building, i.e., the Shell, for purposes of subsection 1102(5) where that building was erected by another taxpayer.

As for the concept of "addition", we are of the view that it generally refers to an extension to a leased building or other leased structure.