Principal Issues: Are projects completed pursuant to contracts entered into before January 27,2009 eligible for the HRTC where delivery occurs after that date?
Position: No. The eligible period commences on January 28, 2009. Goods and services delivered after that date which were contracted before January 29, 2009 are not eligible for the HRTC.
Reasons: The eligible period is specified by legislation.
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Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on July 29, 2009, regarding the new home renovation tax credit (HRTC).
You ask if projects completed pursuant to contracts signed prior to January 27, 2009, with a 50% deposit, are eligible for the HRTC in the case when the balance is paid on delivery that happens after January 27, 2009.
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 law. However, the draft legislation publicly released on September 14, 2009, states that expenditures will qualify 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 will 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.
As mentioned above, home renovations contracted before January 27, 2009, do not qualify for the HRTC. The budget documents do not propose any exception for expenditures billed under those agreements.
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 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.
Minister of National Revenue
Robert Dubis
(905) 721-5191
2009-033559