25 August 2009 Ministerial Correspondence 2009-0325951M4 - 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: What landscaping costs qualify for the HRTC?

Position: A question of fact. Examples provided for guidance.

Reasons: Must meet criteria for eligibility.

August 25, 2009

XXXXXXXXXX

Dear XXXXXXXXXX :

The office of the Honourable Tony Clement, Minister of Industry, forwarded to me a copy of your correspondence, which I received on June 3, 2009, concerning the eligibility of landscaping costs for 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, 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.

Determining whether an expenditure will meet the above criteria is a question of fact. The following are examples of some expenditures that would be eligible:

* landscaping, including new sod, perennial shrubs and flowers, trees, large rocks, permanent garden lighting, permanent water fountain, permanent ponds, and large permanent garden ornaments
* retaining walls
* building a deck, garden/storage shed, or fence
* a new driveway or resurfacing a driveway
* associated costs such as installation, permits, professional services, equipment rentals, and incidental expenses

However, the following expenditures would be ineligible for the HRTC:

* tools
* maintenance contracts for snow removal or lawn care

You can find more information on the HRTC on the Canada Revenue Agency 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 am enclosing a copy of the brochure, for your convenience.

You asked about the possible impact on the HRTC if the minority government should fall before the HRTC legislation is enacted. I regret that I am unable to give a definitive answer to this question because I cannot predict the ultimate consequences of such an event.

I trust that the information provided will be helpful.

						Sincerely,

						Jean-Pierre Blackburn, P.C., M.P.

Enclosure

Andrea Boyle
(613) 946-3252
2009-032595