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: How will a condominium or strata corporation determine a unit or strata lot owner's share of the eligible expenditures for the common areas?
Position: Generally, the expenses incurred for common areas are allocated to unit or strata lot owners based on the condominium or strata corporation's governing documents.
Reasons: The legislation regarding the HRTC has not yet been made public. However, the budget documents have stated that in the case of condominium corporations, the HRTC will be available for eligible expenditures incurred to renovate the unit that is eligible to be the individual's principal residence as well as the individual's share of the cost of eligible expenditures incurred in respect of common areas. Every condominium or strata corporation is governed by its own unique rules, regulations, and bylaws.
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Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on May 21, 2009, concerning the new home renovation tax credit (HRTC).
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, 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.
In the case of condominiums or stratas, the HRTC will be available for eligible expenditures incurred to renovate the unit or strata lot that is eligible to be an individual's principal residence as well as the individual's share of the cost of eligible expenditures incurred for common areas.
The cost of a new roof is an eligible expenditure for the HRTC. Generally, the expenses incurred for common areas are apportioned to unit or strata lot owners based on the condominium or the strata corporation's governing documents.
To support a claim for renovations to common areas of the condominium or strata made by the board of directors on behalf of the individual owners, the Canada Revenue Agency (CRA) anticipates that owners will need documentation from the corporation or the board of directors that identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual condominium or strata lot owner's portion of these expenses. Supporting documentation should include the name of the contractor and, if applicable, the goods and services tax/harmonized sales tax registration number, a description of the work performed, and the dates when the work or services were performed. Generally, such documentation can be a letter from the corporation that is signed by an authorized individual and includes a copy of any agreements, invoices, or receipts.
You can find more information on the HRTC on the CRA 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.
I trust that the information provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
William King
(905) 721-5205
2009-032389
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