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: Is the cost of an automatic standby generator eligible for the home renovation tax credit (HRTC)?
Position: Since the automatic standby generator is permanently installed in the home, if all other requirements are met, the purchase and installation of a unit on an eligible dwelling will qualify as an eligible expenditure for the HRTC.
Reasons: 2009 Budget documents.
XXXXXXXXXX 2009-031122
Robert Dubis
September 14, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
This is in reply to your letter dated February 15, 2009, wherein you asked whether the automatic standby generators sold and installed by your company will qualify as an eligible expenditure for the purposes of the new home renovation tax credit ("HRTC"). We apologize for the delay in responding to your letter.
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, which was introduced in the federal budget tabled on January 27, 2009, has not yet been made public. However, the Honourable James M. Flaherty, 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 if 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 home and a cottage, qualifies for the HRTC.
The determination of whether an expenditure will meet the above-mentioned criteria is a question of fact. You have stated that the automatic standby generators are permanently installed on a cement pad and are connected to both the home's heating fuel supply and main electrical panel. Provided all other requirements are met, it is our view that the purchase and permanent installation of an automatic standby generator on an eligible dwelling will qualify as an eligible expenditure for the HRTC.
You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc.
We trust that the information provided will be helpful.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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