Translation disclaimer
This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.
Principal Issues: [TaxInterpretations translation]
Do the costs of replacing and installing a septic tank and leaching bed qualify as qualifying expenditures for the HRTC?
Position:
Question of fact
Reasons:
The replacement or installation of a septic tank or leaching bed must be done on land that is part of an eligible dwelling to be eligible for the HRTC.
XXXXXXXXXX 2009-031522
I. Landry, M. Fisc.
July 15, 2009
Dear XXXXXXXXXX,
Subject: Home Renovation Tax Credit
This responds to your letter dated March 23, 2009, which was forwarded to us on March 25, 2009 by the Quebec Tax Services Office for response. In your letter, you asked for our comments regarding the eligibility of a septic tank and the work to instal a leaching bed for the home renovation tax credit ("HRTC").
The proposed HRTC provides individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for services received or goods acquired, after January 27, 2009, and before February 1, 2010, under agreements entered into after January 27, 2009. Individuals will be able to claim this credit for the 2009 tax year on qualifying expenditures exceeding $1,000, but of not more than $10,000. The maximum amount of the credit will therefore be $1,350.
Legislation for the new HRTC, 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, announced that home renovation expenditures will be eligible for the HRTC if they are incurred to renovate or alter an eligible dwelling, including the land on which it stands, provided that the renovation or alteration is of an enduring nature and forms an integral part of an eligible dwelling. These expenditures would include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits.
An eligible dwelling is a housing unit that is considered to be the individual's principal residence at any time after January 27, 2009 and before February 1, 2010. Generally, a unit is considered to be an individual's principal residence if it is owned by the individual and ordinarily inhabited by the individual or a member of the individual's family. This means that any home owned by an individual and used for personal purposes could qualify. An eligible dwelling may therefore include both a house and a cottage.
The land on which a residential unit is located may also be part of an eligible dwelling. Generally, the amount of land that can be considered part of an eligible dwelling must not exceed one-half hectare (1.24 acres).
The specifics of each situation will determine whether an expense meets the criteria set out above. In general, the cost of replacing or installing a septic tank or leaching bed on land that is part of an eligible dwelling will be considered a renovation or alteration of an enduring nature that is integral to an eligible dwelling and will qualify for the HRTC.
More information on the HRTC can be found on the Canada Revenue Agency's website at http://www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf and on the Government of Canada's website at www.cra-arc.gc.ca/hrtc.
Best regards,
Louise J. Roy, CGA
Manager
for the interim Director
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.
c.c. Denis Gagnon, Quebec Tax Services Office
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