Home accessibility tax credit (HATC)
Notice to the reader
This measure has received Royal Assent.
1. What is the home accessibility tax credit (HATC)?
For 2016 and subsequent tax years, Budget 2015 introduces a non-refundable HATC for qualifying expenses incurred for work performed or goods acquired in respect of a qualifying renovation of an eligible dwelling of a qualifying individual. A qualifying individual and eligible individuals can claim the HATC.
2. What is meant by a qualifying individual?
A qualifying individual is an individual who is eligible to claim the disability tax credit at any time in a tax year, or an individual who is sixty-five years of age or older at the end of a tax year.
3. What is a qualifying renovation?
A qualifying renovation for the 2016 and subsequent tax years is a renovation or alteration that is of an enduring nature and is integral to the eligible dwelling. The renovation must:
- allow the qualifying individual to gain access to, or to be mobile or functional within, the eligible dwelling; or
- reduce the risk of harm to the qualifying individual within the eligible dwelling or in gaining access to the dwelling.
4. What is meant by an eligible individual?
An eligible individual includes a spouse, common-law partner, and certain supporting relatives of a qualifying individual. Certain supporting relative refers to an individual that has claimed the amount for an eligible dependant, caregiver amount or amount for an infirm dependent age 18 or older for the qualifying person, or could have claimed such an amount if:
- the qualifying individual had no income;
- for a qualifying individual who is a child, if that child had been 18 years of age or older in the tax year;
- in the case of the eligible dependant amount, the individual was not married and not in a common-law partnership;
- in the case of the amount for an infirm dependant age 18 or older, the qualifying individual who is 65 years of age or older at the end of a year and who is not eligible to claim the disability tax credit, the qualifying individual was dependent on the individual because of mental or physical infirmity.
5. What is meant by eligible dwelling?
An eligible dwelling is a housing unit located in Canada. It must be the principal residence of the qualifying individual at any time in the tax year. In general, a housing unit will be considered to be a qualifying individual’s principal residence where it is ordinarily inhabited (or is 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. For the purposes of the home accessibility tax credit, a qualifying individual may have only one principal residence at any time, but may have more than one principal residence in a tax year (for example, in a situation where an individual moves in the tax year). In situations where a qualifying individual has more than one principal residence in a tax year, the total qualifying expenses in respect of all such principal residences of the qualifying individual will be subject to the $10,000 limit.
In the case where a qualifying individual does not own a principal residence, a dwelling will also be considered to be an eligible dwelling of the qualifying individual if it is the principal residence of an eligible individual in respect of the qualifying individual who ordinarily inhabits that dwelling with the eligible individual.
Generally, land of ½ hectare (1.24 acres), including the land upon which the housing unit stands and any portion of the adjoining land, will be considered part of the eligible dwelling.
6. Who is eligible to claim the credit?
A qualifying individual or an eligible individual in respect of a qualifying individual can claim the HATC for the 2016 and subsequent tax years.
A maximum of $10,000 per year in qualifying expenses can be claimed in respect of a qualifying individual. When there is more than one qualifying individual for an eligible dwelling, the total qualifying expenses cannot exceed $10,000 for the dwelling. The claim can be split between the qualifying individual and the eligible individual(s) in respect of the qualifying individual. Where the maximum amount has been exceeded and the claimants cannot agree to what portion each can claim, the Canada Revenue Agency (CRA) will fix the portions.
7. How is the credit calculated?
The HATC is available for the 2016 and subsequent tax years and applies to the total qualifying expenses up to $10,000 per year, resulting in a maximum non-refundable tax credit of $1,500 ($10,000 x 15%).
8. What are qualifying expenses?
Expenses qualify when they are made or incurred in relation to a qualifying renovation or alteration to an eligible dwelling (including the land that forms part of the eligible dwelling) and are of an enduring nature and integral to the dwelling. As a general rule, if the item you purchase will not become a permanent part of your dwelling, it is not eligible. There are items, however, that have been explicitly excluded (see below).
For 2016 and subsequent tax years, the home accessibility tax credit will apply in respect of qualifying expenses for work performed and paid for and/or goods acquired in that particular tax year. Any expenses claimed for the home accessibility tax credit must be supported by a receipt. Keep such receipts in case the CRA asks to see them.
Some businesses or individuals may assert that certain items qualify for the HATC. It is important to remember that you are responsible for ensuring that all eligibility requirements are met when you claim this credit on your tax return.
9. What types of expenses are not eligible?
Expenses as follows will not be eligible for the HATC:
- to acquire a property that can be used independently of the qualifying renovation;
- that is the cost of annual, recurring, or routine repair or maintenance;
- to acquire a household appliance;
- to acquire an electronic home-entertainment device;
- that are the cost of housekeeping, security monitoring, gardening, outdoor maintenance, or similar services;
- for financing costs in respect of the qualifying renovation;
- made or incurred primarily for the purpose of increasing or maintaining the value of the eligible dwelling;
- made or incurred for the purpose of gaining or producing income from a business or property;
- in respect of goods or services provided by a person not dealing at arm’s length with the qualifying individual or the eligible individual, unless the person is registered for the purposes of Part IX of the Excise Tax Act; or
- to the extent that the outlay or expense can reasonably be considered to be have been reimbursed, otherwise than as assistance from the federal or a provincial government, including a grant, forgivable loan, or a deduction from tax.
10. How will I claim the HATC?
A new schedule will be included in your 2016 tax package to allow you to list your eligible expenses and to calculate the amount you can claim. A separate schedule will be required for each claimant with respect to each eligible dwelling. Also, a new line will be added to Schedule 1, Federal Tax, to claim the HATC.
If you are filing a paper return, do not include your receipts or documents supporting your claim. Keep them in case we ask to see them. However, you must attach the new HATC schedule to your paper return.
11. What does the CRA consider to be acceptable documentation?
Documentation, such as agreements, invoices, and receipts, must clearly identify the type and quantity of goods purchased or services provided, including, but not limited to, the following information, as applicable:
- information that clearly identifies the vendor/contractor, their business address, and, if applicable, the GST/HST registration number;
- a description of the goods and the date when the goods were purchased;
- the date when the goods were delivered (keep your delivery slip as proof) and/or when the work or services were performed;
- a description of the work performed, including the address where the work was performed;
- the amount of the invoice; and
- proof of payment. Receipts or invoices must indicate that they are paid in full or be accompanied by other proof of payment, such as a credit card slip or cancelled cheque; and
- a statement from a co-operative housing corporation or condominium corporation (or, for civil law, a syndicate of co-owners) signed by an authorized individual identifying:
- the amounts incurred for the renovation or the alteration work;
- as a condominium owner, your portion of these expenses if the work is performed on common areas;
- information that clearly identifies the vendor/contractor, their business address and, if applicable, their GST/HST registration number; and
a description of the work performed and the dates when the work or services were performed.
Consult our underground economy webpage for tips to protect yourself when hiring a contractor.
To verify whether someone is registered for GST/HST, please consult the GST/HST Registry.
12. Will a renovation or alteration qualify for the HATC if I perform the work myself?
If you do the work yourself in 2016 or a subsequent tax year, the eligible expenses include expenses for building materials, fixtures, equipment rentals, building plans, and permits. However, eligible expenses would not include the value of your labour or tools.
13. I am planning to install grab bars in 2016. Can I hire my brother-in-law to help me out and still be eligible?
It depends. The purchase and installation of grab bars would generally be a qualifying expense under the HATC. If you do the work yourself, the eligible expenses include expenses for building materials, fixtures (including the bars themselves), equipment rentals, building plans, and permits. If you hire a person that is not related to you to install the bars, expenditures for their services would also be eligible.
However, expenses are not eligible if the goods or services are provided by a person related to you, unless that person is registered for goods and services tax/harmonized sales tax (GST/HST) under the Excise Tax Act. So, in your case, if your brother-in-law is registered for GST/HST and if all other conditions are met, the expenses will be eligible for the credit.
14. Does work performed by electricians, plumbers, carpenters, architects… etc. qualify?
Generally, work performed by electricians, plumbers, carpenters, architects… etc. in respect of qualifying expenses incurred in 2016 and subsequent tax years qualifies for the HATC. If you're planning on hiring a contractor to do construction, renovation, or repair work on your home, the get it in writing webpage has information that will help you.
15. Will expenses incurred by co-operative housing corporations or condominium corporations (or, for civil law, a syndicate of co-owners) for common areas qualify for the credit?
Your share of the cost of qualifying expenses incurred and/or goods acquired in 2016 and subsequent tax years by a condominium corporation or a co-operative housing corporation (or, for civil law, a syndicate of co-owners) may qualify for the HATC. The condominium corporation or co-operative housing corporation (or, for civil law, a syndicate of co-owners) will notify you in writing of your share of the expenses.
16. How will the co-operative housing corporation or condominium corporation (or, for civil law, a syndicate of co-owners) determine my share of the qualifying expenses for common areas?
Your share of the qualifying expenses for common areas will be determined in accordance with the governing documents of the co-operative housing corporation or condominium corporation (or, for civil law, a syndicate of co-owners). The governing documents generally establish the allocation of expenses for common areas.
17. I rent out my basement. If I renovate the basement for my tenant to make it more accessible, will I be allowed to claim the credit?
No. 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.
For expenses incurred and/or goods acquired in 2016 and subsequent tax years for common areas or that benefit the housing unit as a whole (such as a ramp or hand rails), you must divide the expense between personal use and income-earning use. For further information, please consult the Business and Professional Income Guide or the Rental Income Guide.
18. If a qualifying expense is also eligible for the medical expense tax credit (METC), will I be allowed to claim both the HATC and METC?
Yes. If a qualifying expense qualifies for the METC, you can claim both the METC and the HATC for that expense.
19. Will the credit be reduced by other government grants or credits that I may receive for the same expenses?
No. Qualifying expenses are not reduced by assistance from the federal or a provincial government, including a grant, forgivable loan, or tax credit.
20. Will qualifying expenses be reduced by any incentive or rebate offered for related goods or services?
Qualifying expenses are generally not reduced by reasonable rebates or incentives offered by the vendor or manufacturer of goods or the provider of the service. For example, a promotion that provides 10% cash back in the form of a gift card based on purchases made from a particular vendor or manufacturer of goods or a service would be acceptable and would not reduce the expenses.
21. Where can I get more information about this new tax credit?
The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its webpages often. All new forms, policies, and guidelines will be posted as they become available.
In the meantime, please consult the Department of Finance Canada's Budget 2015 documents for details.
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