1 September 2009 External T.I. 2009-0324301E5 - Eligible expenditures- home renovation tax credit

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: Is an automated hot tub cover gazebo an eligible expenditure for the HRTC?

Position: Generally, yes

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The automated hot tub cover gazebo that is permanently attached to land that forms part of an eligible dwelling is enduring and integral to the dwelling.

XXXXXXXXXX 								2009-032430	 
									George A. Robertson, CMA 
September 1, 2009

Dear XXXXXXXXXX :

We are writing in response to your correspondence of May 27, 2009, regarding the new home renovation tax credit (HRTC). In particular, you would like to know whether an automated hot tub cover gazebo would qualify as an eligible expenditure for the 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, the Honourable James M. Flaherty, Minister of Finance, 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. Generally, land of one half hectare or less will form part of the eligible dwelling.

Providing the above conditions are met, an automated hot tub cover gazebo that is permanently attached to land that forms part of an eligible dwelling qualifies as an eligible expenditure for the HRTC.

You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc.

We trust that these comments will be of assistance.

Yours truly,

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