Principal Issues: Does the installation of a home lawn sprinkler irrigation system qualify for the HRTC?
Position: Providing all other conditions are met, the costs of the installation of a permanent irrigation system on land forming part of the eligible dwelling will qualify for the HRTC.
Reasons: The permanent irrigation system is of an enduring nature and integral to the eligible dwelling. Generally, land of one-half hectare or less will form part of an eligible dwelling.
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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 November 5, 2009, regarding the new home renovation tax credit (HRTC). In particular, you want to know if the installation of an irrigation system will qualify for the credit.
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 Mr. Flaherty. 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.
The costs associated with the installation of a permanent irrigation system on land forming part of the eligible dwelling will qualify for the HRTC. Generally, land of
one-half hectare or less will form part of an eligible dwelling.
You can find more information about 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
William King
(905) 721-5194
2009-034705