Principal Issues: Does the method or timing of payment determine if an expenditure is eligible for the HRTC?
Position: No. Individuals are free to choose the payment option, provided by the supplier, that best suits them. However, any financing costs associated with the qualifying renovation (for example, instalment interest costs) will not be eligible for the HRTC.
Reasons: Expenditures made or incurred after January 27, 2009, and before February 1, 2010, which are directly attributable to an individual's qualifying renovation and that are made or incurred for the cost of goods acquired or work performed during this same period will qualify for the HRTC.
Signed November 26, 2009
XXXXXXXXXX
Dear XXXXXXXXXX :
I am writing in response to correspondence written on your behalf by your Member of Parliament, XXXXXXXXXX , which I received on September 15, 2009, regarding the new home renovation tax credit (HRTC). He also included a copy of your correspondence in which you asked whether the method or timing of payment determines if an expenditure is eligible for the HRTC.
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.
As mentioned above, expenditures made or incurred after January 27, 2009, and before February 1, 2010, which are directly attributable to an individual's qualifying renovation and that are the cost of goods acquired or work performed during this same period will qualify for the HRTC. Individuals are free to choose the payment option, provided by the supplier, that best suits them. However, any financing costs associated with the qualifying renovation (for example, instalment interest costs) will not be eligible for the HRTC. Supporting documentation should contain a description of the goods; the date the goods were purchased and delivered; the name of the contractor and, if applicable, the goods and services tax/harmonized sales tax registration number; a description of the work performed; the date the work was performed; and the invoice or receipt.
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 am also enclosing a copy of the brochure for your convenience.
I trust that the information I have provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Enclosure
c.c.: XXXXXXXXXX
William King
(905) 721-5205
2009-034140