Translation disclaimer
This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.
Principal Issues: [TaxInterpretations translation]
(a) Are GST and QST part of the eligible expenses eligible for the HRTC? (b) Do homeowners have to pay the full amount of the renovation expenses in the year or can the contingency fund be used to pay part of these expenses? (c) What forms must be completed and filed in order to claim the HRTC? (d) What documents must the condo corporation provide to the co-owners in order for each co-owner to claim the HRTC?
Position:
(a) Yes. (b) Regardless of whether the money to pay for the renovation expenses comes from the contingency fund or from a special levy, the expenses incurred by the condominium corporation may qualify for the HRTC. (c) A new schedule and a new line will be added on the 2009 personal income tax return to claim the credit. (d) In support of a claim for the HRTC in respect of an expenditure incurred by the syndicate of co-owners to renovate or alter the common areas of the immovable, the CRA provides that co-owners will be required to provide a document from the syndicate of co-owners clearly identifying certain information.
Reasons:
(a) The HRTC calculation grid published on the CRA website specifies that the amount of taxes paid for renovation expenses is part of the amount of qualifying expenditures eligible for the HRTC. (b) Legislative analysis. (c) Based on information currently available on the CRA website. (d) Based on information currently available
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XXXXXXXXXX 2009-033235
I. Landry, M. Fisc.
November 20, 2009
Dear XXXXXXXXXX,
Subject: Home Renovation Tax Credit
This is in response to your e-mail of July 13, 2009 in which you asked us for clarification on the application of the home renovation tax credit ("HRTC") in a situation where renovation and alteration expenses have been incurred by a syndicate of co-owners.
Specifically, you are asking whether the goods and services tax (GST) and the Quebec sales tax (QST) are among the qualifying expenditures eligible for the HRTC. In addition, you wish to know whether the funds needed to pay the costs incurred to renovate or modify the common areas of the building can come in whole or in part from the syndicate of co-owners' contingency fund and whether there is a form that must be completed in order to claim the HRTC. You also inquired as to what documents the syndicate of co-owners must provide to the co-owners so that each of them can claim the HRTC.
The situation you indicated in your email appears to be related to an actual situation involving specific taxpayers. As explained in Information Circular 70-6R5, Advance Income Tax Rulings, it is not management's practice to comment on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involves a specific taxpayer and a completed transaction, you should provide all relevant facts and documentation to the appropriate Tax Services Office for its views. We are, however, prepared to provide the following general comments, which we hope you will find helpful.
The proposed HRTC will provide individuals with a temporary 15% non-refundable income tax credit on qualifying home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, under 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 was introduced in the House of Commons on September 30, 2009, by the Honourable James M. Flaherty, Minister of Finance. The proposed legislation states that expenditures will qualify if they are directly attributable 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 located in Canada that is owned by the individual, at the time of the renovation, and ordinarily inhabited by the individual, the individual’s current or former spouse or current or former common-law partner, or a child of the individual at any time after January 27, 2009, and before February 1, 2010. Therefore, any housing unit that an individual owns and uses personally, including a home, condominium or cottage, qualifies for the HRTC.
To begin with, the amount of qualifying expenditures eligible for the HRTC includes GST and QST. With respect to expenses incurred by a syndicate of co-owners to renovate or modify the common areas of a building, the portion of such qualifying expenditures attributable to a co-owner will be eligible for the HRTC if the unit is an eligible dwelling. For this purpose, regardless of whether the money used to pay for the renovation expenses comes from the contingency fund or a special levy, the expenditures incurred by the syndicate will be eligible for the HRTC.
In order to claim the HRTC, a new schedule will be included in your 2009 tax package to allow you to enter your eligible expenditures and calculate the amount you can claim. In addition, a new line will be added to Schedule 1 to claim the HRTC. However, all qualifying expenditures for which an individual wishes to claim the HRTC must have supporting documentation which the individual must retain for provision upon request during an audit. With respect to an expenditure for renovating or altering the common areas of a building incurred by a syndicate of co-owners, the CRA is of the view that a document of the syndicate of co-owners signed by an authorized person for the syndicate will be sufficient evidence to support a claim for the HRTC. The document will need to show the amount incurred for the renovation or alteration work, the owner's share of these expenses, information that clearly identifies the vendor or contractor, the vendor's or contractor's business address and, if applicable, the vendor's or contractor's GST/HST registration number, as well as a description of the work performed and the date on which the work or services were performed.
Best regards,
Louise J. Roy, CGA
Manager
for the interim Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.
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