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: Will expenditures that are incurred in respect of common areas of a condominium and are paid out from a reserve fund and/or special assessment cash call, qualify for the HRTC?
Position: Yes, as long as the expenditures incurred by the condominium corporation are eligible expenditures made in respect of eligible dwellings, they will qualify for the HRTC regardless of whether they are paid out from a reserve fund or a special assessment cash call.
Reasons: The federal 2009 budget documents 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.
XXXXXXXXXX 2009-030918
A. Mahendran
August 11, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit (HRTC) for Condominiums
We are writing in response to your letter of February 6, 2009, wherein you asked for a clarification on whether expenditures that are incurred in relation to a renovation of a condominium and are paid out from a reserve fund and/or special assessment cash call, will qualify for the HRTC.
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, 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, the 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 where 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 condominium unit, 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.
Specifically, you asked whether the condominium corporation can issue receipts to individual owners for their share of the total costs or just for their share of the special assessment cash call. Based on the information provided in the 2009 budget documents, we are of the view that the condominium corporation can issue receipts to individual owners for their share of the total cost of eligible expenditures incurred in respect of common areas.
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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