Principal Issues: Do the costs for the installation of solar photovoltaic (PV) panels qualify for the HRTC?
Position: Depends
Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. Solar PV panels would be considered enduring in nature and integral to the eligible dwelling. If the cost of the solar PV panels is part of the purchase price of the dwelling, it will not qualify.
June 23, 2009
XXXXXXXXXX
Dear XXXXXXXXXX :
The Honourable Jim Prentice, Minister of the Environment, forwarded to me a copy of your correspondence, which I received on May 1, 2009, regarding the new home renovation tax credit (HRTC).
You want to know if the cost of the installation of solar photovoltaic (PV) panels is eligible for the HRTC. As Mr. Prentice informed you, 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 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, announced in Annex 5 of the budget documents 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 as 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 cost of the installation of solar PV panels on an eligible dwelling, including land that forms part of the eligible dwelling, qualifies for the HRTC. However, if the cost is part of the purchase price of the dwelling, it will not qualify. You may wish to know that expenditures that qualify for the HRTC will not be reduced by other government tax credits or grants that the individual may be entitled to.
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. I am enclosing a copy of the Government of Canada document for your convenience.
I trust that the information provided will be helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Enclosure
George A. Robertson
(905) 721-5196
2009-032112