19 February 2010 Ministerial Correspondence 2009-0351831M4 - HRTC - Qualifying expenditures

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Asked for a list of expenditures that will qualify for the home renovation tax credit (HRTC).

Position: Provided general information pertaining to the HRTC and examples of eligible expenditures

Reasons: Generally, the eligible expenditures include expenses for building materials, fixtures, equipment rentals, building plans and permits.

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). You want to know where you can get an HRTC envelope and a list of eligible expenditures for the 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.

The HRTC envelopes are available in most of the retail establishments for home improvement and construction products and services. However, you can still claim the HRTC without an official HRTC envelope.

Due to the large number of home renovation expenditures that can qualify for the HRTC, it is not possible to provide a complete list of eligible expenditures. However, the following examples of expenditures are eligible for the HRTC:

• Renovating a kitchen, bathroom, or basement
• Installing new carpet or hardwood floors
• Building an addition, deck, fence, or retaining wall
• Purchasing a new furnace or water heater
• Painting the interior or exterior of a house
• Installing a new driveway or resurfacing a driveway
• Laying new sod

You can find more information on the HRTC, including examples of eligible and ineligible expenses, 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.

Yours sincerely,

Keith Ashfield
Minister of National Revenue

Ananthy Mahendran
(905) 721-5204
2009-035183