Principal Issues: (a) Would amounts associated with the replacement of an existing driveway qualify as eligible expenditures for the purposes of the home renovation tax credit (HRTC). (b) How/Where will the HRTC be reported for purposes of filing the 2009 individual income tax return.
Position: (a) Yes (b) A new schedule will be included in the 2009 individual income tax return to list the eligible expenditures and calculate the amount to enter on a new line on Schedule 1.
Reasons: (a) Similar to a new driveway or the resurfacing of an existing driveway, the replacement of the same is both enduring in nature and integral to the eligible dwelling (or the land that forms part of the eligible dwelling). (b) Based on information available at this time.
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Dear XXXXXXXXXX :
The Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on June 11, 2009, regarding the new home renovation tax credit (HRTC).
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 of 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, Mr. Flaherty has publicly announced 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 to be 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.
The costs associated with a new driveway, or the replacement or resurfacing of an existing driveway are eligible expenditures for the HRTC. A new schedule will be included in your 2009 income tax return that will allow you to list your eligible expenditures and to calculate the amount to enter on a new line on Schedule 1.
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, which is available on its Web page at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.
I trust that the information provided will be helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
William King
(905) 721-5205
2009-032742