30 October 2009 External T.I. 2009-0314881E5 - HRTC- Eligibility Period

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: Clarification of the statement, "Expenditures incurred pursuant to an agreement that was entered into before January 28, 2009, will not be eligible for the credit." In essence, at what point, in time, are expenditures incurred? Will the kitchen renovation project qualify for the home renovation tax credit (HRTC)?

Position: It is a question of fact whether expenditures are incurred pursuant to a particular contract. The stated contract date for the kitchen renovation project is December 2008; as such, any expenditure incurred under this contract is not eligible for the HRTC.

Reasons: Proposed legislation states that qualifying expenditures do not include outlays or expenses made or incurred under the terms of an agreement entered into before the eligible period. The eligible period is the period that begins on January 28, 2009, and ends on January 31, 2010.

XXXXXXXXXX 							2009-031488
W. King
October 30, 2009

Dear XXXXXXXXXX :

Re: Home Renovation Tax Credit - Eligibility Period

This is in reply to your correspondence dated March 23, 2009, wherein you asked for clarification on the eligibility period for purposes of the new home renovation tax credit (HRTC). We apologize for this delayed reply.

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.

Expenditures (cash, or on credit) incurred pursuant to an agreement entered into before January 28, 2009 are not eligible for the HRTC. It is a question of fact whether expenditures are incurred pursuant to a particular contract. You have stated that the contract date for your kitchen renovation project was December 2008. Any expenditure incurred under this contract is not eligible for the HRTC even if the work was performed or payment was made after January 27, 2009, and before February 1, 2010.

We trust that the information provided is helpful.

Yours truly,

Nerill Thomas-Wilkinson, CA
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch