Principal Issues: [TaxInterpretations translation] Are repair expenses such as minor repairs to a door lock, repair of a part of a garage door motor, repair of a wall due to water damage, and repair of plumbing that caused the water damage or minor repairs to the surface of a parking lot eligible for the HRTC?
Position: Question of fact. Provided all other HRTC eligibility conditions are otherwise satisfied, a repair that is not an annual, recurring or routine repair or maintenance may be eligible for the HRTC if it is of an enduring nature and is integral to the eligible dwelling.
Reasons: Legislative analysis.
XXXXXXXXXX 2010-035322 I. Landry, M. Fisc.
January 13, 2010
Dear Mr. XXXXXXXXXX,
Subject: Home Renovation Tax Credit
This is in response to your email of January 6, 2010 requesting our comments regarding the eligibility of certain expenditures for the home renovation tax credit ("HRTC").
Specifically, you asked us whether repair expenses such as a minor repair to a broken front door lock, a major repair of a part of a garage door motor, a repair of a wall following water damage, and a repair of the plumbing that caused the water damage or a minor repair to the surface of a parking lot are eligible for the HRTC.
The situation you have indicated in your letter appears to be related to an actual situation involving specific taxpayers. As explained in Information Circular 70-6R5, Advance Income Tax Rulings, it is not the Directorate's practice to comment on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involves a specific taxpayer and a transaction, you should provide all relevant facts and documentation to the appropriate Tax Services Office for its views. We are, however, prepared to provide the following general comments, which we hope you will find helpful.
Pursuant to the legislation for the HRTC, expenditures are generally qualifying expenditures eligible for the HRTC if they are made or incurred during the period that begins on January 28, 2009 and that ends on January 31, 2010 and are directly attributable to qualifying renovations. By virtue of subsection 118.04(1), a qualifying renovation is defined as a renovation or alteration of an eligible dwelling (as defined in subsection 118.04(1)) that is of an enduring nature and that is integral to the eligible dwelling.
However, the definition "qualifying expenditure" in subsection 118.04(1) specifically excludes certain expenditures. In particular, expenditures made or incurred that represent the cost of annual, recurring or routine repair or maintenance are specifically excluded from the definition of qualifying expenditure in subsection 118.04(1).
In other words, in situations where all other conditions for HRTC eligibility are otherwise satisfied, a repair that is not an annual, recurring or routine repair or maintenance could be eligible for the HRTC if it is of an enduring nature and is integral to the eligible dwelling.
The particularities of each situation will therefore determine whether a repair expenditure meets the criteria set out above. However, it is our view that the repairs provided in the example are generally of an enduring nature and are integral to the dwelling and could be eligible for the HRTC if they are not annual, recurring or routine repairs or maintenance.
Best regards,
Louise J. Roy, CGA
Manager
for the interim Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.