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: (1) Are there any exemptions of the goods and services tax (GST) for home renovations? (2) Will the incentives for purchasing energy efficient products for homes be increased?
Position: (1) No. (2) The new home renovation tax credit (HRTC) provides an additional incentive.
Reasons: (1) There are no specific exemptions of the GST for home renovations in the Excise Tax Act. (2) The legislation regarding the HRTC has not yet been made public. However, the budget documents state that the 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. The HRTC will not be reduced by any other tax credits or grants to which a taxpayer is entitled under other government programs.
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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 regarding the application of the goods and services tax (GST) on energy-efficient products for homes. Please accept my apology for this delayed reply.
The GST applies to most goods and services sold or provided in Canada, unless specific provisions in the Excise Tax Act, which governs the application of the GST, allow for relief from the tax. Under the Act, there are no specific exemptions of the GST for home renovations. I am unable to comment on the application of the provincial sales tax as that tax is regulated by legislation specific to the respective provincial government.
However, I can tell you that in the federal budget that was tabled on January 27, 2009, the Honourable James M. Flaherty, Minister of Finance, proposed a temporary home renovation tax credit (HRTC) for work performed or goods acquired in respect of an eligible dwelling. 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 has not yet been made public. However, Mr. Flaherty 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.
You can find more information on 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.
The CRA is responsible for administering the GST legislation as passed by Parliament. Any change to the legislation, such as the elimination of the GST on energy-efficient products, is a tax policy matter, which falls under the responsibility of the Department of Finance Canada. I am therefore sending a copy of our correspondence to Mr. Flaherty for his consideration.
I trust that the information I have provided is of assistance.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
Originator:
Kuljit Dhami
Ministerial Correspondence Unit
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
613-952-2214
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