Principal Issues: Client is requesting information of the HRTC grant for home improvements.
Position: The HRTC is a non-refundable income tax credit reducing an individual's federal tax payable. If, however, the total non refundable tax credits, including the HRTC, is more that the individual's federal income tax payable, he or she will not receive a refund for the difference.
Reasons: Legislation
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Right Honourable Stephen Harper, Prime Minister of Canada, 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 response.
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. However, 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.
Some examples of eligible expenditures are:
- Renovating a kitchen, bathroom, or basement
- Installing windows or doors
- Laying new flooring - carpet, linoleum, hardwood, or floating laminate
- Purchasing a new furnace, wood stove, boiler, fireplace, water heater, or oil tank
- Painting the interior or exterior of a house
- Building an addition, garage, deck, garden or storage shed, or fence
- Re-shingling a roof
- Installing a new driveway or resurfacing a driveway
Please note that the costs of routine repairs and maintenance, normally performed annually or more frequently, will not qualify for the HRTC.
As with all non-refundable tax credits, the HRTC will reduce an individual's federal 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 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 enclosing a copy of the brochure for your convenience.
I trust that the information I have provided is helpful.
Yours sincerely,
Keith Ashfield
Enclosure
George A. Robertson (905) 721-5196
2009-035182