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: 1. Can a condominium corporation claim and receive the HRTC on behalf of the condominium unit owners?
2. Is the $10,000 expenditure limit allowed for each condominium unit or for the entire job throughout the condominium building?
3. Is a condominium corporation required to send any supporting documents in order to ensure the HRTC?
Position: 1. No.
2. The $10,000 expenditure limit is the maximum an eligible individual or his or her family can claim in respect of their eligible dwellings which may include a condominium unit.
3. No.
Reasons: 1. Generally, for purposes of the Income Tax Act (ITA)(Canada), the definition of individual does not include a corporation. Therefore, a condominium corporation is not considered to be an eligible individual for purposes of the HRTC and will not be permitted to claim or receive the HRTC on behalf of the unit owners.
2. Based on the information provided in the 2009 federal budget documents
3. Based on the general policy of the CRA for any tax credit claim
XXXXXXXXXX 2009-031389
A. Mahendran
September 11, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit (HRTC)
We are writing in response to your letter of March 10, 2009, wherein you requested our response to a number of questions regarding the proposed HRTC. We apologize for the delay in responding to your letter.
The proposed HRTC will provide individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, for agreements entered into after January 27, 2009. Taxpayers can claim this credit for the 2009 tax year on eligible expenditures exceeding $1,000, but not more than $10,000, which will result in a non-refundable tax credit of 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 made public. However, the Honourable James M. Flaherty, Minister of Finance, has publicly announced 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 if the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures will include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
An eligible dwelling is a housing unit that is eligible at any time after January 27, 2009, and before February 1, 2010, to be an individual's principal residence. In general, a housing unit is considered to be eligible to be an individual's principal residence if it is owned by the individual and ordinarily inhabited by the individual, his or her spouse or common-law partner, or his or her children. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.
The budget documents also state that in the case of condominiums, the HRTC will be available for eligible expenditures incurred to renovate the unit that is eligible to be an individual's principal residence as well as the individual's share of the cost of eligible expenditures incurred in respect of common areas. Accordingly, for condominiums, an individual owner's eligible expenditures for the HRTC will include the individual's share of the total cost of renovating common areas, in addition to the costs to renovate his or her unit. Generally, the expenses incurred for common areas are allocated to unit owners based on the condominium corporation's governing documents.
The facts presented in your letter indicate that each condominium unit owner pays a monthly maintenance fee which goes to the general fund as well as to the reserve fund, and the condominium corporation pays the contractors bill on behalf of the unit owners. You are of the view that the condominium corporation should be allowed to file a single claim for the total expenditures incurred for common areas. Generally, for purposes of the Income Tax Act, the definition of individual does not include a corporation. Therefore, a condominium corporation would not be considered to be an eligible individual for purposes of the HRTC and will not be permitted to claim or receive the HRTC on behalf of the unit owners.
Furthermore, the expenditure limit for the HRTC is applied to a family's total expenditures for all of their eligible dwellings not to each dwelling or unit. Therefore, the maximum expenditures that a family can claim is $10,000. A family will generally be considered to consist of an individual, the individual's spouse or common-law partner, and the individual's children who are under the age of 18 years throughout 2009.
To support a claim for renovations to individual units made by the condominium corporation's board of directors on behalf of the individual owners or to common areas of the condominium, the Canada Revenue Agency anticipates that owners will need documentation identifying the amounts incurred for the renovation work from the corporation or the board of directors. For work performed on common areas, the documentation should clearly identify the individual condominium owner's portion of these expenses. Supporting documentation should include the name of the contractor and, if applicable, the goods and services tax/harmonized sales tax registration number, a description of the work performed, and the dates when the work or services were performed. Generally, documentation may be in the form of a letter from the corporation signed by an authorized individual and can include copies of agreements, invoices, or receipts.
We would like to emphasize that the HRTC is not a rebate but a non-refundable income tax credit provided to individuals for eligible expenditures made in respect of eligible dwellings. Similar to the other non-refundable income tax credits, the HRTC will reduce a taxpayer's federal income tax payable, but will not result in a refund if the taxpayer's total non-refundable tax credits, including the HRTC, are greater than their income tax payable.
We hope that our comments will be of assistance to you.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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