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: 1. What are the general requirements for claiming the HRTC for common area expenses for strata corporations?
2. What forms must be completed to claim the credit?
Position: 1. For renovations to common areas of the strata, the strata board should provide supporting documentation to strata owners.
2. The HRTC will be claimed on the 2009 personal tax return.
Reasons: Annex 5 2009 Federal Budget Documents; Bill C51.
XXXXXXXXXX 2009-033808
Robert Dubis
January 6, 2010
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
Thank you for your correspondence received on August 13, 2009, regarding the new home renovation tax credit (HRTC). You asked whether the cost of re-roofing your strata unit is eligible for the HRTC. 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. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.
In the case of stratas, the HRTC will be available for eligible expenditures incurred to renovate the strata lot that is the individual's eligible dwelling as well as the individual's share of the cost of eligible expenditures incurred for common areas. Generally, the expenditures incurred for common areas are allocated to strata lot owners based on the strata corporation's governing documents.
You mention that you have paid for your share of the XXXXXXXXXX re-roofing for the strata. In general re-roofing will qualify for the HRTC, however, your letter does not indicate if the re-roofing pertains to contracts entered into after January 27, 2009, the commencement date for the HRTC. XXXXXXXXXX re-roofing that was contracted for before January 28, 2009, is not eligible for the HRTC.
To support a claim for renovations to common areas of the strata made by the strata corporation on behalf of the individual owners, owners will need documentation from the corporation or the board of directors that identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual strata lot owner's portion 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.
The HRTC will be claimed on your 2009 personal income tax return. A new line and schedule will be included in your personal income tax return to allow you to calculate and claim the HRTC.
You can find more information on the HRTC on the Canada Revenue Agency's Web site at www.cra.gc.ca/hrtc.
We trust that the information provided is helpful.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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