Principal Issues: Do wood fired outdoor boilers qualify as an eligible expenditure for the HRTC?
Position: Generally yes
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. Wood fired outdoor are a specific type of boiler [located outside of the dwelling, rather than in the dwelling.] Boilers are listed as an eligible expenditure for the HRTC.
XXXXXXXXXX 2009-031478 George A. Robertson, CMA Dear XXXXXXXXXX :
We are writing in response to your email dated March 23, 2009 regarding the new home renovation tax credit (HRTC). You want to know if the costs, including installation, of wood fired outdoor boilers would qualify for the HRTC. We apologize for the delay in replying to your email.
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, the Honourable James M. Flaherty, Minister of Finance, 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. Generally, land of one half hectare or less will form part of the eligible dwelling.
Providing the above conditions are met, the costs, including installation, of a wood fired outdoor boiler on land that forms part of an eligible dwelling will qualify as an eligible expenditure for the HRTC. However, if the cost is part of the purchase price of the dwelling, it will not qualify.
Where the boiler is used for personal and business purposes (e.g. farm business operation), the portion of the cost relating to the business will not qualify for the HRTC. The following Canada Revenue Agency (CRA) publications: Guide T4002, Business and Professional Income, Guide T4036, Rental Income, and Guide T4003, Farm Income, provide guidance on how to allocate costs between personal and business use.
More information about the HRTC is available on the CRA's Web site at www.cra-arc.gc.ca/hrtc.
We trust that these comments will be of assistance.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch