18 November 2009 Ministerial Correspondence 2009-0339571M4 - HRTC - Eligible Expenditures

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: If an individual's home renovation expenses exceed $10,000, will it qualify for the HRTC?

Position: Yes.

Reasons: Based on the information provided in the budget documents, an individual can claim the HRTC 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. Also, the proposed subsection 118.04(3) of the ITA allows an individual's maximum eligible expenses to be calculated as the lesser of the individual's total expenses and $10,000.

XXXXXXXXXX

Dear XXXXXXXXXX :

The office of the Right Honourable Stephen Harper, Prime Minister of Canada, forwarded to me a copy of your correspondence, which I received on August 28, 2009, concerning the new home renovation tax credit (HRTC).

You want to know if you are still eligible to claim the HRTC if your home renovation expenses exceed $10,000.

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.

Providing all the requirements are met, you will qualify for the HRTC even though your total home renovation expenses exceed $10,000. According to the worksheet offered by the Canada Revenue Agency (CRA) on the Web site below, your maximum eligible expenses will be calculated as the lesser of your total expenses and $10,000. Therefore, the maximum allowable home renovation expenses that you can claim is $9,000 ($10,000 - $1,000), resulting in the maximum non-refundable tax credit of $1,350 ($9,000 x 15%).

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

Ananthy Mahendran
(905) 721-5204
2009-033957