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 corporation determine a unit owner's share of the eligible expenditures for the common areas? What documentation is required?
Position: Generally, the expenses incurred for common areas are allocated to unit owners based on the condominium corporation's governing documents. Owners will require documentation from the condominium corporation or the board of directors identifying amounts incurred for the renovation work performed on common areas.
Reasons: For owners of condominium units that are eligible dwellings, the draft legislation publicly released on September 14, 2009 provides that an individual can claim the HRTC for qualifying expenditures incurred to renovate the unit, and for the individual's share of qualifying expenditures incurred by the condominium corporation in respect of common areas. Documentation must clearly identify the type and quantity of goods purchased or services provided. Every condominium corporation is governed by its own unique rules, regulations, and bylaws.
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence regarding the new home renovation tax credit (HRTC). Please accept my apology 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, 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 can be claimed for eligible expenditures an individual incurred to renovate a unit that is an eligible dwelling, and it can also be claimed for the individual's share of eligible expenditures incurred for common areas. The cost of painting the exterior of a housing unit is an eligible expenditure for the HRTC. Generally, the expenses incurred for common areas are allocated to unit owners based on the condominium corporation's governing documents.
To support a claim for renovations to the common areas of the condominium or to individual units made by the condominium corporation's board of directors on behalf of the individual owners, owners will need documentation identifying the amounts incurred for the renovation work from the corporation or the board of directors. For work performed on common areas, the documentation should clearly identify the individual condominium 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, documentation can be in the form of a letter from the corporation signed by an authorized individual and can include copies of agreements, invoices, or receipts.
You are concerned that the HRTC legislation will not become law before the end of 2009. However, the HRTC has sufficient parliamentary support and is expected to be made law by the end of this year.
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 I have provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
William King
(905) 721-5205
2009-033201
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