11 August 2009 External T.I. 2009-0314711E5 - HRTC - planting expenditures

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 permanent plantings for a yard qualify for the home renovation tax credit?

Position: Providing the other conditions are met for the HRTC, the expenditures for new sod, trees, perennial shrubs and flowers that are planted in the land that forms part of an eligible dwelling will qualify for the HRTC.

Reasons: Based on the 2009 federal budget. HRTC Q & A.

XXXXXXXXXX 2009-031471

August 11, 2009

Dear XXXXXXXXXX :

Re: Home Renovation Tax Credit - Planting Expenditures

This is in reply to your fax dated March 19, 2009 asking whether certain permanent plantings for your yard are eligible for the home renovation tax credit (HRTC). We apologize for the delay in responding to your fax.

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, which was introduced in the federal budget tabled on January 27, 2009, has not yet been made public. However, the Honourable James M. Flaherty, Minister of Finance, has publicly announced that expenditures will qualify if they relate 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 that is eligible at any time after January 27, 2009, and before February 1, 2010, to be an individual's principal residence. In general, a housing unit is considered to be eligible to be an individual's principal residence if it is owned by the individual and ordinarily inhabited by the individual, his or her spouse or common-law partner, or his or her children. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.

Providing the above conditions are met, the expenditures for new sod, trees, perennial shrubs and flowers that are planted in land that forms part of your eligible dwelling will qualify 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 on the Government of Canada Web page at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.

We trust that the information provided will be helpful.

Yours truly,

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