21 January 2010 External T.I. 2009-0343341E5 - HRTC- Supporting Documentation for Condominiums

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: What type of documentation must be provided by condominium corporations to members to support their claims for the HRTC for common area expenses?

Position: The condominium corporation must inform the individual owners, in writing, of their share of the qualifying expenditures incurred by the corporation. Supporting documentation may be in the form of a letter which identifies the individual member's portion of the expenses, the name of the contractor, if applicable the GST/HST registration number, a description of the work performed and the dates when the services were provided.

Reasons: 118.04(1)-Qualifying expenditure; 118.04(2(a) - Application Rules

XXXXXXXXXX 							2009-034334
      							Robert Dubis
January 21, 2010

Dear XXXXXXXXXX :

Re: Home Renovation Tax Credit

This is in response to your correspondence which we received October 2, 2009, regarding the new home renovation tax credit (HRTC). You asked what type of documentation will be required from the condominium management to support the individual owners' claims for renovations funded by the condominium fees. We apologize for this delayed reply.

The legislation regarding the new HRTC has been enacted and is contained in section 118.04 of the Income Tax Act. The HRTC provides individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for services received or goods acquired, after January 27, 2009, and before February 1, 2010. However, expenditures for services received or goods acquired under agreements entered into before January 28, 2009, do not qualify for the HRTC. 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.

Under section 118.04, expenditures qualify for the HRTC 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 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 condominiums, the HRTC can be claimed for qualifying expenditures incurred by the individual to renovate the unit that is the individual's eligible dwelling as well as the individual's share of the cost of qualifying expenditures incurred by the condominium corporation. You stated that the individual owners paid one half the costs with the other half being funded through a fund administered by the condominium corporation. Renovations and alterations paid from a contingency or special purpose fund administered by the corporation will qualify for the HRTC provided all other requirements (e.g., integral to the dwelling, enduring nature) are met.

Generally, the qualifying expenditures incurred by the condominium corporation are allocated to the owners based on the governing documents of the condominium corporation. To support a claim for renovations made by the condominium corporation on behalf of individual owners, owners will need documentation from the corporation or board of directors that identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual owner's share 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.

You can find more information on the HRTC on the Canada Revenue Agency 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