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: Are expenditures incurred for common property renovations eligible for the HRTC if the amounts are paid from a contingency reserve fund?
Position: Yes, providing the renovations are integral to the strata corporation's common property and are enduring in nature.
Reasons: Expenditures that are integral to the eligible dwelling and enduring in nature will qualify for the HRTC.
XXXXXXXXXX 2009-032740
W. King
December 3, 2009
Dear XXXXXXXXXX :
This is in reply to your correspondence dated June 12, 2009, wherein you asked if expenditures for common property renovations are eligible for the new home renovation tax credit (HRTC) if the amounts are paid by the strata corporation from a contingency reserve fund. We apologize for this delayed reply.
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 was introduced in the House of Commons on September 30, 2009, by the Honourable James M. Flaherty, Minister of Finance. The proposed legislation 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 strata corporations, the HRTC will be available for qualifying expenditures incurred by an individual to renovate a strata lot that is the individual's eligible dwelling, as well as for the individual's share of the cost of qualifying expenditures incurred by the strata corporation for the common property of the strata corporation. Generally, the strata corporation will allocate to strata lot owners a share of the expenses incurred for commonly owned components based on the strata corporation's governing documents. Expenditures that are integral to the strata's common property and enduring in nature will qualify for the HRTC whether they are paid out of a contingency reserve fund, or by a special levy.
To support a claim for qualifying renovations made by the strata corporation's strata council to common property of the strata corporation, strata lot owners will need documentation from the corporation or the strata council, which identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual strata lot owner's portion of these expenses, as well as the name of the contractor, the GST/HST registration number if applicable, a description of the work performed, and the dates when the work or services were performed. Generally, documentation may be in the form of a letter from the corporation signed by an authorized individual and can include copies of agreements, invoices, or receipts
We trust that the information provided is helpful.
Yours truly,
Nerill Thomas-Wilkinson, CA
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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