Filing Your Return -> Home Renovation and Home Accessibility Tax Credits - Federal Home Accessibility Tax Credit (HATC)
Federal Home Accessibility Tax Credit (HATC)
Income Tax Act s. 118.041
The Home Accessibility Tax Credit, which is a non-refundable tax credit, was introduced in the Federal 2015 Budget, and received Royal Assent in June 2015, so is now law. The credit is for qualifying expenses incurred in 2016 or later, for work performed or goods acquired in respect of a qualifying renovation of an eligible dwelling of a qualifying individual. The HATC can be claimed by a qualifying individual or an eligible individual.
The HATC applies to the total qualifying expenses, up to a maximum of $10,000 per year. The credit is at the lowest personal tax rate of 15%, so the maximum tax reduction per year is $1,500 ($10,000 x 15%).
Medical Expense Tax Credit
If a qualifying expense also qualifies for the medical expense tax credit (METC), both the METC and the HATC can be claimed for the same expense.
A qualifying individual is an individual:
If there are two qualifying individuals in the same principal residence, the maximum is $10,000 related to that principal residence.
Expenses qualify if they are of an enduring nature and integral to the dwelling, when they are made in relation to a qualifying renovation or alteration to an eligible dwelling, including the land (generally, up to 1/2 hectare of land) that forms part of the eligible dwelling. Generally, if the item purchased or work performed will not become a permanent part of your dwelling, it is not eligible.
Expenses do not qualify if the goods or services are provided by a person related to you, unless that person is registered to collect goods and services tax/harmonized sales tax (GST/HST).
A qualifying renovation is one of an enduring nature and is integral to the eligible dwelling. The renovation must:
An eligible dwelling is:
Generally, a housing unit will be considered to be a qualifying individual's principal residence where it is ordinarily inhabited, or expected to be ordinarily inhabited within that tax year, by the qualifying individual and it is owned, either jointly or otherwise, by the qualifying individual or the qualifying individual's spouse or common-law partner.
Although a person can have only one principal residence at a time, when a an individual moves during the year, there can be two principal residences during that year. In such a situation, the HATC maximum of $10,000 applies to the total cost of qualifying expenses for both residences, NOT for each residence.
If the qualifying individual does not own a principal residence, a dwelling will be considered to be an eligible dwelling if it is the principal residence of an eligible individual in respect of the qualifying individual who ordinarily lives in that dwelling with the eligible individual.
If you earn business or rental income from part of an eligible dwelling, you can only claim the amount for qualifying expenses incurred for the personal-use areas of your dwelling.
Patrie v. The Queen was heard in November 2019 and was a win for the taxpayer. The judge made it very clear that CRA can only use the applicable provisions of the Income Tax Act to determine eligibility for the tax credit.
Canada Revenue Agency (CRA) Resources
Revised: April 27, 2021
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