Principal Issues: Are owners of private care homes allowed to claim the HRTC?
Position: It depends on whether the private care homes are eligible dwellings or not, and whether the renovation work is carried out in the personal-use areas, business-use areas, or common areas.
Reasons: If the private care homes are not eligible dwellings, renovations made to the homes will not qualify for the HRTC. If the private care homes are eligible dwellings, the full amount of the qualifying expenditures made for the personal-use areas of the homes will qualify for the HRTC. Renovation work carried out exclusively in the business-use areas of the homes will not qualify for the HRTC.
XXXXXXXXXX
Dear XXXXXXXXXX :
XXXXXXXXXX , forwarded to me a copy of your correspondence, which I received on September 24, 2009, concerning the new home renovation tax credit (HRTC). You asked why owners of private care homes are omitted from the benefits of the HRTC program.
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 was introduced in the House of Commons on September 30, 2009, by the Honourable James M. Flaherty, Minister of Finance. The proposed legislation 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.
If the private care homes are not eligible dwellings, as described above, renovations made to the homes will not qualify for the HRTC. If the private care homes are eligible dwellings, the full amount of the qualifying expenditures made for the personal-use areas of the homes will qualify for the HRTC. Renovation work carried out exclusively in the business-use areas of the homes will not qualify for the HRTC. For expenses made for common areas of the homes, for example, the kitchen or the dining area, or expenses that benefit the homes as a whole, for example, re-shingling a roof, you are required to divide the expense between personal-use and business-use.
You can find more information on the HRTC, including a list of eligible expenses, 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
Ananthy Mahendran
(905) 721-5204
2009-034252