3 December 2009 External T.I. 2009-0342261E5 - 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: Does the purchase and installation of a dock at a cottage qualify as an eligible expenditure for the HRTC?

Position: Depends

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The purchase and installation of a permanent dock attached to land that forms part of the eligible dwelling qualifies for the HRTC. A dock which is not permanently attached [portable] to land does not qualify for the HRTC.

XXXXXXXXXX 							2009-034226
								George A. Robertson, CMA
December 3, 2009

Dear XXXXXXXXXX :

This is in reply to your correspondence dated September 24, 2009, regarding the new home renovation tax credit (HRTC). In particular, you want to know if a dock at your cottage will qualify as an eligible expenditure for 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. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.

It is a question of fact whether this expenditure meets the above criteria. However, as a general rule, the materials and installation costs for a dock will be eligible for the HRTC if the dock is permanently attached to land that forms part of the eligible dwelling. Generally, land of 1/2 hectare (1.24 acres), including land upon which the individual's housing unit stands and any portion of the adjoining land, will be considered part of the individual's eligible dwelling if the individual owns the land. Your description indicates that the dock is not permanently attached to land and therefore, will not be eligible for the HRTC.

You can find more information on the HRTC on Canada Revenue Agency's Web site at www.cra.gc.ca/hrtc.

We trust that these comments will be of assistance.

Yours truly,

Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch