10 December 2009 Ministerial Correspondence 2009-0333051M4 - 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:

Do the costs for shutting down a septic system and to hookup to a new sewer would qualify for the HRTC?

Position:

Question of fact. Generally, if all the conditions are met, the costs for shutting down a septic system that is on the land that forms part of an eligible dwelling, as well as the costs incurred on the property to hook up to new sewers, would be eligible for the HRTC.

Reasons:

Draft legislation

XXXXXXXXXX

Dear XXXXXXXXXX :

The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, in which you asked if the cost incurred for shutting down a septic system and to hook up to new sewers would qualify for the new home renovation tax credit (HRTC). Please accept my apology for this delayed response.

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 Mr. Flaherty. 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.

Determining whether an expenditure will meet the above-mentioned criteria is a question of fact. Generally, if the above conditions are met, the costs for shutting down a septic system that is on the land that forms part of an eligible dwelling, as well as the costs incurred on the property to hook up to new sewers, would be eligible for the HRTC.

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 reference.

I trust that the information I have provided is helpful.

Sincerely,

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

Enclosure

Isabelle Landry
(613) 957-8971
2009-033305