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: Can homeowners claim a set amount for the value of their labour, when they perform their own renovations or alterations?
Position: Homeowners can do the work themselves; however, they cannot claim the value of their labour or any tools purchased to perform the work.
Reasons: Generally, under common law, a person cannot contract with oneself.
Signed November 12, 2009
XXXXXXXXXX
Dear XXXXXXXXXX :
Thank you for your correspondence received on July 30, 2009, regarding the new home renovation tax credit (HRTC). You suggest that homeowners who do their own renovations or alterations should be allowed to claim a set amount for the value of their labour.
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.
The costs associated with the renovation or alteration of your home will generally qualify for this non-refundable income tax credit even if you do the work yourself. However, as you have noted, you cannot claim the value of your own labour.
You can find more information on the HRTC on the Canada Revenue Agency (CRA) Web site at www.cra.gc.ca/hrtc and in the Government of Canada Web brochure available at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.
The CRA will be responsible for administering the HRTC, whereas the Department of Finance Canada is responsible for developing and amending tax policy. Any changes to tax policy would have to be proposed by the Minister of Finance and approved by Parliament. I am therefore forwarding a copy of our correspondence to Mr. Flaherty, for his consideration.
I trust that the information provided will be helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
William King
(905) 721-5205
2009-033574
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