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: 1. Can members of a co-operative housing corporation claim the HRTC for renovations to the housing unit they reside in for expenditures incurred either directly by the member or by the co-operative housing corporation?
2. What is the maximum HRTC claim per household?
Position: 1.Members who own shares in a co-operative housing corporation can claim the HRTC for expenditures they incur for the unit they reside in if the housing unit is their eligible dwelling.
2. The HRTC is family based. The maximum eligible expenditures per family is $10,000 and may be split among eligible family members. Maximum eligible expenditures include the total of expenses allocated to the member by the co-operative housing unit and the expenses incurred directly by the member.
Reasons: 1.Draft 118.04-Eligible dwelling.
XXXXXXXXXX 2009-033849
Robert Dubis
December 17, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
This is in response to your correspondence of August 26, 2009, wherein you requested a formal tax ruling on behalf of XXXXXXXXXX . We apologize for this delayed reply.
The issue in your request for an advance income tax ruling pertains to the new home renovation tax credit (HRTC). At this time we are unable to provide a ruling. As noted in subparagraph 15(h) of Information Circular IC 70-6R5, the Canada Revenue Agency (CRA) may refuse to rule when a ruling would involve the interpretation of a provision of the Income Tax Act that has not been enacted. 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 we are able to provide the following general comments regarding the 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 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. In the case of a co-operative housing unit, the individual must own at the time of the renovation, alone or jointly with another person, a share of the capital stock of the co-operative housing corporation which the individual acquired for the sole purpose of inhabiting the housing unit owned by that corporation.
The HRTC can be claimed for eligible expenditures incurred directly by a member to renovate the co-operative housing unit that is the individual's eligible dwelling. The HRTC may also be claimed for the member's share of the cost of eligible expenditures incurred by the board of directors for common areas of the co-operative housing corporation. Generally, the expenditures incurred for common areas are allocated to the members based on the governing documents of the co-operative housing corporation.
To support a claim for renovations to the co-operative housing unit or the common areas of the co-operative housing corporation made by the board of directors on behalf of individual members, members will need documentation from the corporation that identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual member'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, such documentation can be a letter from the corporation that is signed by an authorized individual and can include copies of any agreements, invoices, or receipts.
Eligibility for the HRTC is family based. The expenditure limit for the HRTC applies to a family's total expenditures for all of their eligible dwellings and not to each dwelling. Therefore, the maximum expenditure that a family can claim is $10,000. The claim can be split among eligible family members but the total amount claimed cannot exceed the maximum allowable. A family will generally be considered to consist of an individual, his or her spouse or common-law partner, and their children who are under the age of 18 throughout 2009.
Your correspondence does not provide details of any specific renovations or alterations that XXXXXXXXXX . plans to undertake, but states that expenditures will be paid from a pool of funds to which all members have contributed. Renovations and alterations paid from a contingency or special purpose fund administered by the corporation will qualify for the HRTC provided all other requirements (i.e., integral to the dwelling, enduring nature) are met.
You can find more information on the HRTC on the CRA Web site at www.cra.gc.ca/hrtc.
We trust our comments will be of assistance to you.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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