23 February 2010 Ministerial Correspondence 2009-0344081M4 - Eligible expenditures- home renovation tax credit

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: Taxpayer wanted to know whether specific expenditures would qualify for the HRTC.

Position: Depends, expenditures before January 28, 2009 are not eligible. Expenditures must be enduring in nature and integral to the eligible dwelling. Expenditures that are part of routine repairs and maintenance, normally performed on an annual or more frequent basis, would not qualify for the HRTC.

Reasons: Legislation

XXXXXXXXXX

Dear XXXXXXXXXX :

I am writing in response to your correspondence addressed to my predecessor, the renovation tax credit (HRTC). I apologize for the delay in responding.

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.

The expenditures that you incurred in 2008 for replacing your septic system will not qualify for the HRTC. However, if the following expenditures meet the above conditions, they will qualify for the HRTC:

• fixing the damage from the septic installation - topsoil and reseeding
• replacing a garden retaining wall and pathway
• resurfacing steps
• installing an electrical transfer panel to operate a portable generator
• installing a stainless steel chimney liner
• repairing a leaky basement wall

Please note that the portable generator will not qualify for the HRTC. As well, if the expenditures are part of routine repairs and maintenance that were performed annually or frequently, they will not 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 in the Government of Canada brochure available at www.actionplan.gc.ca/grfx/docs/hrtc_eng.pdf. I am enclosing a copy of the brochure, for your convenience.

I trust that the information provided is helpful.

Yours sincerely,

Keith Ashfield

Enclosure

George A. Robertson
(905) 721-5196
2009-034408