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Home Renovation Tax Credit (HRTC)


On Tuesday, January 27th, the Federal Government released its fiscal 2009-2010 budget. As you are likely aware, it included a number of actions that will be taken to stimulate the home improvement industry.


Homeowners, don't miss the deadline!


Did you know...


The non-refundable Home Renovation Tax Credit (HRTC) is based on eligible expenses for work performed or goods acquired after January 27, 2009, and before February 1, 2010, in respect of an eligible dwelling, pursuant to an agreement entered into after January 27, 2009.


Canadian homeowners should be aware of the deadline to ensure they are able to claim the non-refundable tax credit of up to $1,350 for their home renovation or alteration. Eligible expenses for goods acquired during this period, even if they are installed after January 2010, will still qualify. If an eligible expense involves work performed by a contractor or a third party, and the work is not completed by the end of the eligible period, only the portion that is completed before February 1, 2010 will qualify even if a payment has been made.


In addition, there is no requirement that homeowners pay the amount in full before the deadline. For example, if you are billed by a contractor for goods acquired and work performed before the deadline and you do not pay the bill until after the deadline, your expenses would still be eligible for the HRTC provided that you met all the other requirements.


Non-refundable tax credit


It is also important to note that the HRTC is non-refundable and will reduce your federal income tax, if you have any. However, if the total of your non-refundable tax credits is more than your federal income tax, you will not receive a refund for the difference.  


 


Supporting documentation


    

  • To qualify, the expenses you claim for the HRTC must be supported by acceptable documentation, such as agreements, invoices, and receipts, and must clearly identify the type and quantity of goods purchased or services provided, including, but not limited to, the following information, as applicable:
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  • information that clearly identifies the vendor/contractor, their business address and the GST/HST registration number;
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  • a description of the goods and the date when the goods were purchased;
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  • the date when the goods were delivered (keep your delivery slip as proof) and/or when the work or services were performed;
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  • a description of the work performed including the address where the work was performed;
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  • the amount of the invoice;
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  • proof of payment.  Receipts or invoices must indicate paid or be accompanied by other proof of payment, such as a credit card slip or cancelled cheque; and
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  • a statement from the co-operative housing corporation or condominium corporation (or, for civil law, a syndicate of co-owners) signed by an authorized individual identifying:
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  • the amounts incurred for the renovation or the alteration work; 
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  • as a condominium owner, your portion of these expenses if the work is performed on common areas; 
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  • information that clearly identifies the vendor/contractor, their business address and, if applicable, their GST/HST registration number; and 
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  • a description of the work performed and the dates when the work or services were performed. 
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For more information on the HRTC and eligible expenditures, visit the Canada Revenue Agency Web site at cra.gc.ca/hrtc or call CRA's individual income tax enquiries service at 1-877-959-1-CRA (1-877-959-1272).


    

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The Home Renovation Tax Credit* is a non-refundable tax credit based on eligible expenses for improvements to your house, condo or cottage. It can be claimed on your 2009 income tax return. It applies to work performed or goods acquired after January 27, 2009, and before February 1, 2010 under an agreement entered into after January 27, 2009.


Note
Eligible expenses for goods acquired during this period, even if they are installed after January 2010, will still qualify. If an eligible expense involves work performed by a contractor or a third party, and the work is not completed by the end of the eligible period, only the portion that is completed before February 1, 2010 will qualify even if a payment has been made.


The HRTC applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 [($10,000 - $1,000) × 15%].


*Subject to Parliamentary approval.


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The credit is based on eligible expenses for work performed or goods acquired after January 27, 2009, and before February 1, 2010. Eligible expenses for goods acquired during this period, even if they are installed after January 2010, will still qualify. If an eligible expense involves work performed by a contractor or a third party, and the work is not completed by the end of the eligible period, only the portion that is completed before February 1, 2010 will qualify even if a payment has been made. Expenses incurred pursuant to an agreement that was entered into before January 28, 2009, will not be eligible for the credit.


Please find below details about the new Home Renovation Tax Credit (HRTC) to aid you and your family when talking steps to improve your home.  For further information, please visit the Government of Canada website: cra.gc.ca/hrtc 


Home Renovation Tax Credit (HRTC):


The HRTC will provide a temporary 15-per cent income tax credit on eligible home renovation projects for work performed, or goods acquired, after January 27, 2009 and before February, 1, 2010, for agreements entered into after January 27, 2009. The 15% credit may be claimed for the 2009 taxation year on the portion of eligible expenditures exceeding $1,000, but not more than $10,000, and will provide up to $1,350 in tax relief.


A dwelling will generally be considered eligible if it is used for personal purposes. This will include houses, cottages and condominium units.


The HRTC can be claimed for renovations and alterations to a dwelling, or the land on which it sits, that are enduring in nature. In addition to products and materials, costs associated with such projects will also be eligible for the credit, including permits, professional services, cost of labour, equipment rentals and incidental expenses.


Routine repairs and maintenance normally performed on an annual or more frequent basis (e.g. cleaning, lawn fertilization and snow removal) will not qualify for the credit. The cost of purchasing furniture, appliances, audio-visual electronics and construction equipment will not be eligible.


Examples of HRTC-eligible expenditures include:


    

  • renovating a kitchen, bathroom or basement
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  • new carpet or hardwood floors
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  • building an addition, deck, fence or retaining wall
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  • a new furnace or water heater
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  • painting the exterior or interior of a house
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  • resurfacing a driveway
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  • laying new sod.
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Examples of ineligible expenditures include:


    

  • purchases of furniture and appliances
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  • purchases of tools
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  • carpet cleaning
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  • maintenance contracts (e.g. furnace cleaning, snow removal, lawn care, pool cleaning).
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NOTE: Increasing Residential Energy Efficiency


The HRTC will complement support provided by the Government for Canadians to undertake energy-saving improvements to their homes. Federal grants paid through the ecoENERGY Retrofit program will not reduce the value of claims made for these expenditures under the HRTC.


The ecoENERGY Retrofit program provides home and property owners with grants of up to $5,000 to offset the costs of making energy efficient improvements. For more information on ecoENERGY programs, visit www.ecoaction.gc.ca 


 














    







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