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RENOVATION TAX CREDIT
Contractors Beware!
2009 was a great year to carry out home renovations.
If you failed to do so, too late. The 12 month window of opportunity
ended on January 31, 2010. If you were unaware of it but did
some work on your house or cottage, dig out those receipts;
if they add up to more than $1000 for eligible projects, you
can apply for a rebate.
Don’t confuse the Home Renovation Tax
Credit with the Eco-Energy grants which are still available
but apply only to projects which reduce a homeowners energy
consumption. The federal tax credit for home renovations isn’t
as financially rewarding but is a much simpler process. It
involves filling out one simple form on your tax return—Schedule
12.
The tax rebate was designed as an economic stimulus. In short,
residential property owners can apply for a tax rebate equal
to 15% of the costs of renovation projects. The first $1000
doesn’t count and there is a maximum of $10,000 that
can be claimed. That makes the maximum rebate 15% of $9000
or $1,350.
Almost everything is eligible from floor to
ceiling, wall to wall, indoor and out. If it’s an improvement
integral to the structure, it counts. A project that qualifies
for an Eco-energy grant can also qualify for the rebate.
The rebate is calculated on the cost of the materials and
the labour. With respect to labour, there is one catch. Your
own time is worthless. Only that of a contractor can be claimed;
and, only if you have a receipt.
The one time offering and the simplicity of
the program implies that the Feds won’t be auditing
homeowners. It’s not necessary to submit receipts but
you must save them in case they ask for them. It’s unlikely
they would—unless they’re auditing your contractor.
And that is a possibility.
Do you know any contractors who will not charge
you GST if you don’t require a receipt? Uhuh. Probably
because they’re not claiming those earnings on their
taxes. The rebate instructions spell out the wrongfulness
of this and associated penalties. So, if you and others list
a contractor’s name and his earnings on schedule 12,
they can add it up and cross-reference the total to what he
claimed as earnings. If those earnings are less than what
he claimed, he may be audited. And though it’s lawful
to avoid taxes, it is illegal to evade taxes.
And, contractors who deal under the table may
want to reconsider claiming the full amount of their income;
or, at least getting in touch with their customers who were
not charged GST. ¤
Rad
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