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: Whether a senior must be living with their daughter in the same dwelling before the renovations begin, in order for the amounts paid to qualify for the Multigenerational Home Renovation Tax Credit (MHRTC).
Position: No, there is no requirement is section 122.92 of the Act.
Reasons: Under subsection 122.92(1), a qualifying renovation is one that creates a secondary unit in the dwelling to permit a qualifying individual to live with a qualifying relation. In addition, in order to be considered an eligible dwelling, the housing unit must be ordinarily inhabited, or intended to be ordinarily inhabited, by the qualifying individual and a qualifying relation of the qualifying individual within 12 months at the end of the renovation period. Therefore, the provisions of the MHRTC do not require a qualifying individual to ordinarily reside with a qualifying relation of the qualifying individual in the eligible dwelling, prior to the start of the qualifying renovation in the eligible dwelling, in order for the qualifying expenditures to qualify for the MHRTC.
XXXXXXXXXX 2023-096063
C. Underhill
March 6, 2023
Dear XXXXXXXXXX:
Re: Multigenerational Home Renovation Tax Credit
We are writing in response to your email dated January 6, 2023, asking whether a senior and their adult child must reside together, in the same house, before the renovations begin in the house, in order for the amounts paid to qualify for the Multigenerational Home Renovation Tax Credit (MHRTC).
You explained that you ordinarily reside in the province of British Columbia and your 97 year old mother, ordinarily resides in the province of Ontario. You plan on building a secondary housing unit in your house in British Columbia so that your mother can ordinarily reside in it with you. You asked whether you and your mother must reside together, in your home in British Columbia, prior to the commencement of the renovations to your home in order for the amounts paid to qualify for the MHRTC.
Our comments:
This technical interpretation provides general comments about the provisions of the Income Tax Act (the Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.
The MHRTC allows eligible individuals to claim certain qualifying expenditures paid for a qualifying renovation made to an eligible dwelling. Up to $50,000 in qualifying expenditures can be claimed per qualifying renovation, which results in a tax credit of up to $7,500.
The rules for the MHRTC can be found in section 122.92 of the Act. The terms eligible dwelling, qualifying renovation, secondary unit, eligible individual, qualifying individual, renovation period taxation year are all defined in subsection 122.92(1) of the Act.
An eligible dwelling is defined as a housing unit that is owned (either jointly or otherwise) by the qualifying individual, the spouse or common-law partner of the qualifying individual or a qualifying relation in respect of the qualifying individual. The dwelling must be where the qualifying individual and a qualifying relation in respect of the qualifying individual ordinarily reside, or intend to ordinarily reside, within twelve months after the end of the renovation period.
A qualifying renovation is defined as a renovation or alteration of, or addition to, an eligible dwelling that is of an enduring nature and integral to the eligible dwelling. The renovation is undertaken to allow the qualifying individual and a qualifying relation to reside together in the dwelling, by establishing a secondary unit within the dwelling for occupancy by the qualifying individual or the qualifying relation.
A secondary unit is defined as a self-contained unit with a private entrance, kitchen, bathroom facilities and sleeping area.
Therefore, a qualifying renovation is one that creates a secondary unit within the dwelling to permit a qualifying individual to live with a qualifying relation.
An eligible individual in respect of an eligible dwelling includes:
- an individual who ordinarily resides, or intends to ordinarily reside, in the eligible dwelling within 12 months after the end of the renovation period in respect of a qualifying renovation of the eligible dwelling and who is:
(i) a qualifying individual,
(ii) the cohabiting spouse or common-law partner of a qualifying individual at any time in the renovation period taxation year, or
(iii) a qualifying relation of a qualifying individual; or
- an individual who is a qualifying relation of a qualifying individual, and who owns the eligible dwelling
A qualifying individual is defined as an individual who is 65 years of age or older at the end of the renovation period taxation year or an individual who is 18 years of age or older at the end of the renovation period taxation year who is eligible for the disability tax credit.
The renovation period taxation year means the tax year in which the renovation period in respect of the qualifying renovation ends.
For the purposes of this credit, a qualifying relation includes an individual who has reached 18 years of age before the end of the renovation period taxation year and is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual or their spouse or common-law partner.
The MHRTC is available for amounts paid for work performed or goods acquired after December 31, 2022.
It is a question of fact as to whether the MHRTC can be claimed for a particular renovation. However, section 122.92 of the Act does not require a qualifying individual to ordinarily reside with a qualifying relation of the qualifying individual in the eligible dwelling, prior to the start of the qualifying renovation in the eligible dwelling, in order for the qualifying expenditures to qualify for the MHRTC. Therefore, the Act does not require your mother to reside with you, in your home in British Columbia, before the qualifying renovations begin in your home, in order for the amounts paid to qualify for the MHRTC.
We trust that these comments will be of assistance to you.
Yours truly,
Chris Brennan, CPA, CA
Acting Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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