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: Are a variety of tree services provided by the taxpayer eligible for the home renovation tax credit (HRTC)?
Position: Services including trimming, pruning, fertilization and pest and disease control do not qualify as eligible expenditures. Tree removal and stump grinding on their own will not qualify, however they may qualify as part of an eligible landscaping project or renovation such as the installation of a deck.
Reasons: The renovation or alteration must be enduring in nature and integral to the dwelling. Routine maintenance generally performed on an annual or more frequent basis does not qualify for the HRTC.
XXXXXXXXXX 2009-031472
Robert Dubis
September 14, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
This is in reply to your e-mail dated March 20, 2009, wherein you asked whether the tree services provided by your company will qualify as an eligible expenditure for the purposes of the new home renovation tax credit ("HRTC"). We apologize for the delay in responding to your e-mail.
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 determination of whether an expenditure will meet the above-mentioned criteria is a question of fact. You have stated that the types of services provided by your company include tree removal, stump grinding, trimming, pruning, fertilization and pest and disease control. It is our view that services such as trimming, pruning, fertilization, and pest and disease control are routine maintenance and are not eligible expenditures for the HRTC. The removal of a tree or stump grinding on its own would not likely qualify for the HRTC. However, if the tree removal and stump grinding relates to a renovation project that is of an enduring nature and is integral to the eligible dwelling, such as eligible landscaping projects or building a deck, the costs of the tree removal and stump grinding would qualify for the HRTC.
You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc.
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 & Regulatory Affairs Branch
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