27 November 2009 Ministerial Correspondence 2009-0309571M4 - Home renovation tax credit

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: Does each project need to exceed $1,000 or can the expenditures for more than one project be grouped together to exceed the $1,000?

Position: The expenditures of the family can be pooled together to exceed the base amount of $1,000.

Reasons: The expenditures must be in respect of a renovation or alteration of an eligible dwelling. There is no requirement that each project, where there are several projects, exceed the base amount of $1000.

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Dear XXXXXXXXXX :

The office of the Right Honourable Stephen Harper, Prime Minister of Canada, forwarded to me a copy of your correspondence concerning the new home renovation tax credit (HRTC). Please accept my apology for this delayed reply.

You wanted clarification as to whether expenditures for each project must be greater than $1,000 or if the expenditures for more than one project can be grouped together to exceed the $1,000.

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 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, his or her current or former spouse or current or former common-law partner, or his or her children 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 and a cottage, qualifies for the HRTC.

Family members will be subject to a single limit based on their pooled expenditures. For example, if a family pays $900 for new tiles in their kitchen and $900 for a new hardwood floor in another room, the expenditures can be pooled and the family is entitled to a $120 HRTC [15% x ($1,800 -$1,000)]. It is anticipated that in most cases one family member will claim the HRTC. The maximum HRTC available is $1,350 [15% x ($10,000 -$1,000)].

You can find more information about the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc and in the Government of Canada brochure available at www.actionplan.gc.ca/grfx/docs/hrtc_eng.pdf.

I trust that the information I have provided is helpful.

Sincerely,

Jean-Pierre Blackburn, P.C., M.P.

Minister of National Revenue

Nancy Shea-Farrow
(905) 721-5226
2009-030957