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 of replacement motors for a furnace qualify as an eligible expenditure for the HRTC?
Position: Yes
Reasons: The purchase of replacement motors for a furnace would be considered to be integral to the dwelling and enduring in nature and not a cost of routine repairs and maintenance, normally performed annually or more frequent basis.
XXXXXXXXXX 2010-036145
George A. Robertson, CMA
May 3, 2010
Dear XXXXXXXXXX :
We are writing in response to your email dated March 18, 2010, regarding the new home renovation tax credit (HRTC) wherein you asked if the purchase of replacement motors for a furnace would qualify for the HRTC.
The legislation regarding the 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. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.
Provided the conditions outlined above are met, the cost of replacement motors for a furnace qualifies for the HRTC. Please note that the cost of routine repairs and maintenance, normally performed on an annual or more frequent basis, does not qualify for the HRTC.
As with all non-refundable tax credits, the HRTC will reduce your federal tax payable. If, however, your total non-refundable tax credits, including the HRTC, is more than your federal income tax payable, you will not receive a refund for the difference.
You can find more information on the HRTC on the Canada Revenue Agency 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.
We trust our comments will be of assistance to you.
Yours truly,
Lita Krantz
Assistant Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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