Double dipping the home accessibility tax credit
By FBC Tax Consultants
July 4, 2016 - Most tax changes tend to be tax increases; however, we’re always on the lookout for a tax saving opportunity.
Since the Trudeau government has come into power many tax reforms the former Harper government introduced like the family tax cut, increases to the allowable TFSA contributions, and the child tax credits have systematically rolled back to previous levels.
This is perhaps an example of how complex the tax system is. It’s constantly changing.
However, amongst all the tax increases, we have found something that the current government hasn’t changed from the old government.
The Home Accessibility Tax Credit (HATC) benefits seniors and persons with disabilities. Not only does it stand alone as a separate credit but it may also be claimed as a medical expense as long as both criteria and conditions are present under both rules.
On April 21, 2015 the Conservative government introduced a new HATC. The non-refundable credit provides tax relief of 15% up to $10,000 (or $1,500 in tax credit) of eligible expenditures for seniors and persons with disabilities.
The spouse or common-law partner of a qualifying individual can claim the credit, as well as, a family member of the individual or of the qualifying spouse could be eligible to claim the credit.
The credit is available for amounts paid for work performed or goods acquired after December 31, 2015. So this is new for 2016!
The HATC may be claimed on qualifying renovations or alterations made to a home in Canada that allows a person to be more mobile, safe, and functional.
To qualify, a renovation or alteration must enable a senior or a person with a disability to be more mobile or functional, or reduce the risk of harm in the home.
Permits and equipment rental used for the renovation are included in allowable costs. Recurring or routine maintenance, or expenses incurred mainly for the purpose of increasing or maintaining the value of the home, will not qualify for the credit.
In some cases, the renovation expenses qualify for the medical expense tax credit, and as such, you can claim both the HATC and the medical expense tax credit for these expenses.
This is a great find that we can thank the Conservative government for implementing and we can thank the Liberal government for keeping in place.
FBC is Canada's Farm & Small Business Tax Specialist, providing tax accounting and bookkeeping services to over 20,000 farms and small businesses from Ontario to British Columbia. Our complete financial planning for farm and small business owners takes a long-term approach to address your specific needs at all stages of life and business, minimizing your taxes year after year. Year-round services include tax planning, tax optimization, business consulting and audit protection.
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