7 October 2009 Ministerial Correspondence 2009-0323861M4 - HRTC - Eligible Expenditures

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 the costs of renovating a kitchen or bathroom and painting the interior or exterior of a house eligible expenditures for the HRTC?

2. Are the costs of replacing window coverings eligible expenditures for the HRTC?

Position:

1. Yes.

2. Generally, the costs of replacing window coverings, such as blinds and shutters, that are directly attached to the window frame will qualify for the HRTC.

Reasons:

2009 federal budget

XXXXXXXXXX

Dear XXXXXXXXXX :

Thank you for your correspondence asking whether certain renovation projects would qualify for the new home renovation tax credit (HRTC). Please accept my apology for this delayed response.

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 law. However, the draft legislation publicly released on September 14, 2009, 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.

In the case of condominiums, the HRTC will be available for eligible expenditures incurred to renovate the unit that is an eligible dwelling of the individual, as well as the individual's share of the cost of eligible expenditures incurred for common areas.

The costs of renovating a kitchen or bathroom and painting the interior or exterior of a house are eligible expenditures for the HRTC. Generally, the costs of replacing window coverings, such as blinds and shutters, that are directly attached to the window frame would also be eligible expenditures 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 enclosed Government of Canada brochure, which is also 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.

Enclosure

Ananthy Mahendran
(905) 721-5204
2009-032386