Principal Issues: Is the HRTC applicable if an individual is already in a federal income tax credit position?
Position: Yes, however, if the individual's non-refundable credits, including the HRTC, total more than your federal income tax, the Canada Revenue Agency will not refund the excess.
Reasons: The HRTC is a 15% non-refundable income tax credit.
XXXXXXXXXX
Dear XXXXXXXXXX :
XXXXXXXXXX , forwarded to my predecessor, the Honourable Jean-Pierre Blackburn, a copy of your correspondence concerning the new home renovation tax credit (HRTC). Please accept my apology for this delayed reply.
The legislation regarding the new HRTC has been enacted and is contained in section 118.04 of the Income Tax Act. The HRTC provides individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for services received, or goods acquired, after January 27, 2009, and before February 1, 2010. Note that expenditures for services received or goods acquired under agreements entered into before January 28, 2009, do not qualify for the HRTC. 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.
Under section 118.04, expenditures qualify for the HRTC 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 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 with all non-refundable tax credits, the HRTC will reduce an individual's federal income tax payable. If, however, the total non-refundable tax credits, including the HRTC, is more than the individual's federal income tax payable, he or she will not receive a refund for the difference.
You can find more information on the HRTC, including how the credit is calculated, on the CRA 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.
Yours sincerely,
Keith Ashfield
Minister of National Revenue
William King
(905) 721-5194
2009-034752