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: Does the installation of a geothermal heating system qualify for the HRTC?
Position: Yes. The installation of a geothermal heating system in an eligible dwelling will qualify for the HRTC.
Reasons: Installation of heating systems generally qualifies for the HRTC. Furnaces and boilers are listed as specific examples of heating systems on the CRA website.
Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, the Minister of Finance, forwarded to me a copy of your correspondence, which I received on July 13, 2009, regarding 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 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.
Your correspondence specifically discusses geothermal heating systems as a way for homeowners to go green with their heating systems. Provided the above conditions are met, the installation of a geothermal heating system will generally qualify for the HRTC. Furthermore, expenditures that qualify for the HRTC will not be reduced by other government tax credits or grants such as those received under the ecoENERGY Retrofit program.
Although the design of the 2009 income tax return has not been completed, the Canada Revenue Agency (CRA) anticipates that the total allowable expenditures, up to a maximum of $9,000 ($10,000 - $1000), will be reported in Step 1 on Schedule 1. That amount will be included in the total at line 335, which will then be multiplied by 15% at line 338.
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, which is available at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf. I am enclosing a copy of the brochure, for your information.
I trust that the information provided is helpful.
Jean-Pierre Blackburn, P.C., M.P.
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