The taxpayer appealed a decision of the Minister to reject his claim for a GST new housing rebate on the basis that the building “looked like new”, the CRA’s analysis was flawed, and that drywall should be excluded from consideration. The appellant renovated a one-level ranch style house over 4 and one-half years. The renovated building had new external windows and doors, and the kitchen, dining area and living room had walls removed to create a great-room, with new drywall, flooring, electrical, and kitchen cabinetry. The completely renovated space comprised just under half of the liveable floor space (excluding garage). The remaining rooms had their drywall repaired and painted and fixtures replaced, but did not have most of their drywall replaced.
In finding that the renovation work did not rise to the level of “substantial renovation,” so that the Minister correctly denied the new housing rebate, Bocock J first quoted (at para 8) the statements in B-092 that “In a major renovation project, the interior of a building is essentially gutted" and "Generally, all interior walls (e.g., drywall) throughout the subject area (at least 90% of the building) would have to be removed or replaced,” and then stated (at para 18, 20):
The test is not the appearance of the building after renovation. The test is whether … may one say that the building was renovated sufficiently enough that all or substantially all of the building has been removed or replaced: Camiré v. HMQ, 2008 TCC 82 at paragraph 11.
Even when applying the test in Lair [2003 TCC 929], widely viewed as the most favourable to the granting of rebates, the renovations carried out by Mr. and Mrs. Whittall do not match up. At best, only half the rooms were substantially renovated. Most walls, unless torn down permanently or newly constructed, were “re-smoothed” and not removed, largely due to disposal costs, but nonetheless suggesting replacement was not a necessity.
In rejecting a submission that the failure to remove much of the drywall should not be counted against the appellant because “drywall is integral to ‘interior supporting walls’ or ‘external walls’,” he stated (at para. 23):
[T]he primary purpose of gypsum wallboard is to provide a flat, stable and smooth surface for decoration. Panelling, ceiling tile and tile board are not different. Whatever load bearing strength or fire retardation qualities they contain are collateral to their main purpose.