19 May 2009 External T.I. 2009-0316501E5 - Home Renovation Tax Credit custom window covering

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 custom window coverings eligible for the proposed home renovation tax credit?

Position: Any window covering, including blinds, shutters and shades, that is directly attached to the window frame and whose removal would alter the nature of the dwelling, will qualify for the HRTC. However, draperies or curtains would generally not be considered to be fixtures and therefore will not qualify for the HRTC.

Reasons: 2009 federal budget

XXXXXXXXXX 						2009-031650
N. Shea-Farrow
May 19, 2009

Dear XXXXXXXXXX :

Re: Home Renovation Tax Credit - Custom Window Coverings

We are writing in response to your letter dated April 2, 2009 concerning whether expenditures for custom window coverings are eligible for the home renovation tax credit (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 as set out in Information Circular IC 70-6R5 dated May 17, 2002. Where the particular transactions are completed the inquiry should be addressed to the relevant tax services office. However, we offer the following general comments which may be of assistance to you.

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, pursuant to agreements entered into after January 27, 2009. The credit can be claimed for the 2009 tax year on 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 Honourable James M. Flaherty, Minister of Finance, announced in Annex 5 of the budget documents 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 the alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures would include the cost of labour and professional services, building material, fixtures, equipment rentals, and permits.

Items that are affixed to an eligible dwelling and cannot be moved without altering their value or usefulness would generally be considered integral to the dwelling and therefore, qualify for the HRTC. However, items that retain a value independent of the renovation will not be considered integral to the dwelling and therefore will not qualify for the HRTC.

The determination of whether an expenditure will meet the above mentioned criteria is a question of fact. As a general rule, items that are considered fixtures would be eligible. Under this approach, any window covering, including blinds, shutters and shades, that is directly attached to the window frame and whose removal would alter the nature of the dwelling, will qualify for the HRTC. However, draperies or curtains would generally not be considered to be fixtures and therefore will not qualify for the HRTC.

More information about the credit is available on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc and on the Department of Finance Canada Web site at

www.budget.gc.ca/2009/plan/bpa5a-eng.asp#Personal.

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