Section 118.04

Regarding the eligibility for the home renovation tax credit ("HRTC") of the costs of a septic tank and the work to instal a leaching bed, and after noting that an eligible dwelling may include a cottage, CRA stated:

In general, the cost of replacing or installing a septic tank or leaching bed on land that is part of an eligible dwelling will be considered a renovation or alteration of an enduring nature that is integral to an eligible dwelling and will qualify for the HRTC.

An individual, covered by an insurance policy, carried out renovation work following water damage in the spring of 2009 and thereafter was reimbursed therefor by the insurance company except for the $300 deductible. CRA stated:

For purposes of the HRTC, we are generally of the view that it is the individual, and not the insurance company, who has incurred or made qualifying expenditures for the purposes of the HRTC in a situation where, inter alia, the individual has contracted directly with the contractor, is personally liable for the payment of expenses relating to qualifying renovations, and has ultimately paid for the renovations himself or herself.

Regarding the eligibility for the HRTC of expenditures made or incurred by a syndicate of co-owners during the eligible period to acquire property in the same period that will not be used until after the eligible period – or of expenditures made or incurred during the eligible period for the development of renovation plans when the plans so developed will not be used until after the eligible period – CRA stated:

Expenditures made or incurred by a syndicate of co-owners in the eligible period for property acquired in the eligible period will be qualifying expenditures for the HRTC even if the qualifying renovations relating to that property is not carried out until after January 31, 2010.

Similarly, expenses made or incurred by a syndicate of co-owners during the eligible period for services rendered in that period, such as the development of a renovation plan, will be qualifying expenditures for the HRTC even if the qualifying renovations relating to those services is not carried out until after January 31, 2010.

However, expenses made or incurred by a syndicate of co-owners during the eligible period for services relating to qualifying renovations that are not rendered until after the eligible period will not be eligible for the HRTC.

CRA indicated that “the amount of qualifying expenditures eligible for the HRTC includes GST and QST” and that, in the case of renovations by a syndicate of co-owners, “regardless of whether the money used to pay for the renovation expenses comes from the contingency fund or a special levy, the expenses incurred by the syndicate will be eligible for the HRTC.”

An individual plans to renovate the kitchen, bathroom and reconfigure the dimensions of certain rooms in the individual’s principal residence in 2009. The individual plans to hire a design contractor to develop the renovation plans and then hire another contractor to carry out the renovation work. CRA stated:

[C]osts incurred for renovation plans by a design contractor will be qualifying expenditures expenses for the HRTC provided that all conditions are met. In order for costs incurred for renovation plans by a design contractor to be qualifying expenditures, the renovation plans must be directly attributable to qualifying renovation work, the costs for carrying out the renovation plans must be incurred within the eligible period, and the services of the design contractor must be received before the end of the eligible period.

Will an individual who builds a home on land the individual owns from July 1 to November 30, 2009 for $100,000 be eligible for the HRTC if the individual begins living in the home on November 30, 2009 and (a) incurs additional expenses of $20,000 after moving into the home, (b) incurs no additional expenses on the land after it is built, or (c) does not move into the home until February 10, 2010? CRA indicated:

1. Yes, if the expenses incurred after November 30, 2009 to January 31, 2010 are directly attributable to qualifying renovations.
2. No, since no expenses directly attributable to qualifying renovations were incurred after November 30, 2009.
3. No, the housing unit is not an eligible dwelling.

The costs of completely demolishing a residence and of rebuilding it were not eligible expenses for the purposes of the home renovation tax credit ("HRTC") given that the “the demolition work is not a qualifying renovation” and given that “the rebuilding work is for the construction of a new dwelling and not for the renovation of an eligible dwelling.”

Would 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 be eligible for the credit? CRA stated:

[I]n 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.

… [T]he 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.