Save Receipts To Qualify For Home Accessibility Tax Credit

“I told you so. . . .” These four dreaded words are often on the tips of tongues at this time of the year, although polite tax practitioners try to resist uttering them when skimpy recordkeeping results in higher taxes – or reduced tax credits - for their clients.

This is an easy problem to avoid and no tax practitioner can emphasize enough how critical it is for taxpayers to keep receipts for their expenses throughout the year. For example, to qualify for a new non-refundable credit available in 2016 for home renos that allow a disabled taxpayer better access and/or mobility in a home, you absolutely need to retain all the receipts for the costs associated with those renovations.

The Home Accessibility Tax Credit was introduced and passed into law by the former Conservative government. It is designed to provide tax relief for taxpayers who are 65 or older or who are eligible for the disability amount, who must renovate their homes to gain access to, or be more mobile or functional within the dwelling. The maximum credit is 15% of $10,000, or $1,500. Where more than one taxpayer in a family qualifies for this credit, the credit may be split between taxpayers so long as the maximum $10,000 claim is not exceeded.

The requirements for the renovations are similar to the criteria for claiming renovations for disabled individuals as a medical expense. And here’s the good news: Where the expenditure qualifies for both credits, both credits may be claimed.

To qualify for the Home Accessibility Tax Credit, an eligible dwelling must be a housing unit owned and ordinarily inhabited, or reasonably expected to be ordinarily inhabited, at any time during the taxation year by a qualifying individual, or an “eligible individual” (that is, a spouse or common-law partner, or caregiver who was eligible to claim the disabled individual for the spousal, eligible dependant, caregiver or infirm dependant amount) so long as the qualifying individual does not own and ordinarily inhabit another housing unit in Canada throughout the year.  Where the qualifying individual’s income is too high to be claimed, their caregiver will still be an “eligible individual” and may still claim the credit.

An eligible dwelling includes the land subjacent to the housing unit and up to 1/2 hectare of contiguous land (or more if necessary for the use and enjoyment of the housing unit as a residence).

A “qualifying renovation” is defined to mean a renovation or alteration of an eligible dwelling of a qualifying individual or an eligible individual in respect of a qualifying individual. It must be of an enduring nature, integral to the dwelling and undertaken to enable the qualifying individual to gain access to, or to be mobile or functional within, the eligible dwelling, or reduce the risk of harm.

A “qualifying expenditure” can be an outlay or expense incurred during the taxation year, including the cost of goods acquired or services received during the year, the cost of permits required, and costs for the rental of equipment used in the course of the qualifying renovation.

Amongst the expenses not allowed are financing costs; household appliances (excluding furnaces and other heating systems); electronic home-entertainment devices; annual, recurring or routine repairs or maintenance; the costs for housekeeping, security monitoring, gardening, outdoor maintenance services; and costs incurred to gain or produce income from a business or property. You can’t pay any of the renovation expenses to a relative or other non-arm’s length person unless that person is registered for the GST/HST. Finally, you can’t claim expenses that are reimbursed, other than government assistance amounts.

Evelyn Jacks is a best-selling Canadian author of 52 books including her latest, Family Tax Essentials. Evelyn is the Founder and President of Knowledge Bureau, a national educational institute. To learn more about professional tax preparation and tax-efficient wealth management, see www.knowledgebureau.com.

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