Principal Issues: Whether the cost of installing a central vacuum is eligible for the Home Renovation Tax Credit.
Position: The central vacuum unit itself would not qualify, however some of the costs associated with the installation might.
Reasons: We consider a central vacuum to fall under the category of a "household appliance". Household appliances are specifically excluded under the definition of "qualifying expenditure" in the legislation.
Signed on June 7, 2010
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Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to my predecessor, the Honourable Jean-Pierre Blackburn, a copy of your correspondence concerning the home renovation tax credit (HRTC). In particular, you wanted to know whether the cost of a central vacuum system was eligible for the HRTC. I apologize for the delay in replying.
The legislation regarding the HRTC 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 Act specifies that a "qualifying expenditure" does not include an outlay or expense to acquire a household appliance. Household appliances are therefore not eligible expenditures for the HRTC even if they are permanently installed or built-in. A central vacuum cleaner is considered a household appliance.
Some of the costs associated with the installation of a central vacuum system could relate to renovations which the Canada Revenue Agency (CRA) would not consider household appliances. Costs for modifying electric wiring or installing hoses that run through the walls to the inlets around the home could qualify for the HRTC. However, expenditures relating to the central vacuum unit itself and its portable accessories or attachments, such as a powerhead, brushes, or a connecting hose, would fall under the category of a household appliance and would not be qualifying expenditures for the purposes of the HRTC.
You can find more information on the HRTC on the CRA 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
Andrea Boyle
(613) 957-8971
2009-033115