Principal Issues: Do hot tubs qualify for the HRTC?
Position: Depends on the type of hot tub.
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 in product' type is not enduring in nature or integral to the dwelling. 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 2009-031357
George A. Robertson, CMA
May 29, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit (HRTC)
We are writing in response to your March 12, 2009 letter concerning whether hot tubs would be eligible for the new 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 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% 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 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 described three scenarios for hot tub purchases:
- The 'plug in product' type of hot tub 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 of hot tub that needs to be transported by the dealer, properly situated on the prepared site and hard wired directly to the homeowner's electrical panel. These hot tubs are generally not considered portable.
- The customer is completing a back yard renovation that includes new decking, site preparation (as described immediately above) for a hot tub as well as the electrical connection for the hot tub.
The plug in product 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 that are hard wired into the homeowner's electrical panel would qualify for the HRTC as they appear to be enduring in nature and integral to the eligible dwelling. New decking has been listed as an eligible expenditure for the HRTC.
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
