19 May 2009 External T.I. 2009-0313841E5 - Eligible expenditures- home renovation tax credit

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Do hot tub [spas] qualify for the HRTC?

Position: Depends on the type of hot tub [spa].

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The 'plug and play' type is not enduring in nature. The heavier variety that is hard wired directly to the electrical panel and permanently placed in position is considered enduring in nature and integral to the dwelling.

XXXXXXXXXX 2009-031384
George A. Robertson, CMA
May 19, 2009

Dear XXXXXXXXXX :

Re: Home Renovation Tax Credit (HRTC)

We are writing in response to your e-mail of March 13, 2009 concerning whether hot tubs [spas] would be eligible for the HRTC.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. However, we are prepared to provide the following general comments, which may be of assistance.

The proposed HRTC will provide individuals with a temporary 15% income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, pursuant to agreements entered into after January 27, 2009. The credit can be claimed in the 2009 tax return for eligible expenditures exceeding $1,000, but not more than $10,000, and will provide a tax credit up to $1,350.

The legislation regarding the new HRTC, which was introduced in the federal budget tabled on January 27, 2009, has not yet been drafted. However, the budget documents state that expenditures will qualify if they relate to a renovation or an alteration of an eligible dwelling, including land that forms part of the eligible dwelling, and the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits.

You have indicated that there are generally two categories of hot tubs [spas] in the marketplace:

• The 'plug and play' type that comes with the cord connected and ready to use, without the need of a permanent electrical connection. These tubs tend to be smaller and are considered portable.
• The larger, heavier type that needs to be hard wired directly to the homeowner's electrical panel. These tubs are generally not considered portable.

The plug and play type of hot tubs would not qualify for the HRTC. Providing all other conditions are met, the larger, heavier type of hot tubs that are permanently positioned in place and hard wired directly to the homeowner's electrical panel would qualify for the HRTC as they appear to be enduring in nature and integral to the eligible dwelling.

More information about the HRTC is available on the Canada Revenue Agency's Web site at www.cra-arc.gc.ca/hrtc.

We trust that these comments will be of assistance.

Yours truly,

Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch