Principal Issues: 1. Do home renovations completed or contracted before January 28, 2009 qualify for the HRTC?
2. Would the purchase of a gas barbecue or a rechargeable lawnmower qualify for the HRTC?
Position: 1. No. The budget documents did not propose to grandfather any expenditure incurred or contracted before January 28, 2009.
2. No. The purchase of a gas barbeque or a rechargeable lawnmower is not a renovation or an alteration to a dwelling.
Reasons: 1. The budget documents state that only expenditures incurred or contracted after January 27, 2009 qualify for the HRTC.
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Dear XXXXXXXXXX :
Thank you for your correspondence received on July 17, 2009, regarding the new home renovation tax credit (HRTC). You have asked if projects completed in prior years are eligible for the HRTC, if there is any grandfathering clause, and if the purchase of either a natural gas barbeque or a rechargeable lawnmower would qualify for the 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, 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.
Home renovations completed or contracted before January 28, 2009, do not qualify for the HRTC. The purchase of a gas barbeque or of a rechargeable lawnmower is not a renovation or an alteration of a dwelling and does not qualify for the HRTC. The budget documents did not propose to grandfather any expenditure incurred before January 28, 2009, and also stated that appliances do not qualify for the HRTC.
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 at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.
I trust that the information I have provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Robert Dubis
(905) 721-5191
2009-033326