We built a new deck this year and we're expecting to take advantage of the Home Renovation Tax Credit (HRTC). How is it supposed to be claimed? How does the credit work? Would it be claimed on the income tax return, or is there a separate application/process? What supporting documentation is required?
If you built the deck yourself, you will need to retain copies of your materials receipts (note that tools purchased cannot be claimed). If you hired a contractor to do the work, the contractor must be registered for the GST and you must retain the invoice.
All work must have been completed between January 27, 2009 and February 1st, 2010.
The CRA will include a new schedule in your 2009 income tax package that will help you claim the tax credit. The credit is 15% of the eligible expenses over $1,000 but less than $10,000. For example, if you spent $10,000, your credit would be ($10,000 - $1,000) x 15% or $1,350.
The HRTC is a non-refundable tax credit, which is used to reduce your taxes payable. It is not claimed against income. For example, if you had taxes payable for $12,000 for 2009 and had eligible HRTC expenses of $10,000, your tax bill would be reduced by $1,350 to $10,650.
The Canada Revenue Agency has some excellent information on their website at the following URL http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/hmwnr/hrtc/menu-eng.html
Forms will be included with your 2009 income tax package.