4 May 2010 Ministerial Correspondence 2010-0357611M4 - HRTC-Who eligible to claim

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: Can children, who are older than 18 years, claim HRTC for parents' residence, where the children reside with the parents?

Position: No, the children do not meet the qualified relation definition. Also, the dwelling is not the eligible dwelling of the children.

Reasons: Legislation

XXXXXXXXXX

Dear XXXXXXXXXX :

The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence concerning the new home renovation tax credit (HRTC). In particular, you would like to know if your two children, who are over 18 years of age, can claim the HRTC for renovations they made to your principal residence. I apologize for the delay in replying.

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. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.

Since your residence is not owned by your children, it will not qualify as an eligible dwelling for your children for purposes of the HRTC. Therefore, your children cannot claim the HRTC for any expenditure made by them to renovate your residence. As well, you cannot claim any of those expenditures because your children are over 18 years of age and do not meet the definition of qualifying relation to allow splitting of expenditures for the HRTC.

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.

I trust that the information I have provided is helpful.

Yours sincerely,

Keith Ashfield
Minister of National Revenue

George A. Robertson
(905) 721-5196
2010-035761