Principal Issues: Must a design and construction management firms provide original supplier and contractor invoices to its clients to support the clients' claims for the HRTC?
Position: No. Invoices from the design and management firm which comply with the CRA's published "acceptable supporting documentation" requirements are sufficient documentation for clients to support their claims for the HRTC.
Reasons: Claims for the HRTC must be supported with acceptable supporting documentation.
XXXXXXXXXX 2009-034077 Robert Dubis November 24, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
Thank you for your correspondence received on September 14, 2009, regarding the new home renovation tax credit (HRTC). You asked what type of documentation your company is required to provide to clients to support their claims for the HRTC as well as a general question about warranty information. The warranty enquiry is a contractual matter between the seller and purchaser and is not a matter for the Canada Revenue Agency (CRA) to comment on.
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.
You indicate that your company is a design and project management firm that manages home renovations for its clients. You purchase the required goods and services under your business name, pay the suppliers and contractors and are reimbursed by your client. You provide your clients with copies of receipts to verify your expenditures and ensure they have appropriate documentation for warranty purposes. We are confirming that your clients do not need the original invoices from your suppliers to support their claims for the HRTC and that your invoice is sufficient documentation for their claims.
You should ensure that your invoices comply with the "supporting documentation requirements" for the HRTC as outlined on the CRA Web site at www.cra.gc.ca/hrtc.
We trust that the information provided is helpful.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch