Principales Questions: Can the Home Accessibility Tax Credit (HATC) be claimed if the individual who makes or incurs the expenses is not a qualifying individual or an eligible individual?
Position Taken: No.
Reasons: To be a qualifying expenditure of a qualifying individual or an eligible individual, the expense must be made or incurred by either of those individuals. This position is supported by the special rule set out in subsection 118.041(2) which provides that an outlay or expense made or incurred by a cooperative housing corporation, condominium corporation, a syndicate of co-workers, or by a trust may qualify as qualifying expense of the qualifying individual or the eligible individual.
XXXXXXXXXX 2015-060691
Lucie Allaire, LLB, CPA, CGA, D. Fisc.
March 15, 2016
Sir,
Subject: Home Accessibility Tax Credit (HATC)
This letter is in response to your email of September 3, 2015 in which you asked us to confirm your understanding to the effect that an HATC cannot be claimed if the individual who makes or incurs an expenditure respecting a dwelling is not a "qualifying individual" (footnote 1) or an "eligible individual" (footnote 2).
Unless otherwise stated, all statutory references are references to the provisions of the Income Tax Act (the "Act").
Our Comments
This technical interpretation provides general comments about the provisions of 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 70-6R6, Advance Income Tax Rulings and Technical Interpretations.
By virtue of subsection 118.041(3), an individual who is a qualifying individual or an eligible individual in respect of an "eligible dwelling" (footnote 3) may be entitled to non-refundable HATC for a taxation year. The amount of the HATC is the appropriate percentage for the year, or 15% of "qualifying expenditures" in respect of the eligible dwelling for the taxation year for the taxation year, up to $10,000.
A qualifying expenditure of an individual is defined in subsection 118.041(1) and includes any expense made or incurred during the taxation year that is directly attributable to "qualifying renovation" (footnote 4) of an eligible dwelling of a qualifying individual or an eligible individual in respect of a qualifying individual.
Subject to the application of subsection 118.041(2), we are of the view that a qualifying expenditure of the individual in respect of an eligible dwelling in paragraph 118.041(3)(b) means a qualifying expenditure of either the qualifying individual or the eligible individual. To that end, under subsection 118.041(1) a qualifying expenditure of an individual must be made or incurred, as the case may be, by the qualifying individual or the eligible individual. However, the individual requesting the HATC under subsection 118.041(3) can be the qualifying individual or the eligible individual irrespective of which of the two individuals incurred the qualifying expenditure.
Subsection 118.041(2) provides, inter alia, that a qualifying expenditure in respect of an eligible dwelling of a qualifying individual or an eligible individual includes, in certain circumstances, an outlay or expense incurred by a cooperative housing corporation, a condominium corporation, a syndicate of co-owners or a trust.
Consequently, a qualifying individual or an eligible individual cannot claim the HATC if an individual other than the qualifying individual or the eligible individual makes or incurs the outlay or expenditure in relation to the eligible dwelling of the qualifying individual or the eligible individual.
We hope that our comments will be of assistance.
Louise J. Roy, CPA, CGA
Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
FOOTNOTES
Due to the requirements of our systems, page footnotes contained in the original document are reproduced below:
1 As defined in subsection 118.041(1).
2 Ibid.
3 Idem.
4 Idem.