Canadian Home Credit Hailed Big Success

by Mike Godfrey, Tax-News.com, Washington

26 January 2011

Over three million Canadian households have benefited from the Home Renovation Tax Credit, the government has reported, heralding its postive impact on taxpayers and the country’s economy.

According to the government, the average household saved tax of CAD700, with one in three owner-occupied households claiming the credit, in what was a major component of the government’s Economic Action Plan.

The Home Renovation Tax Credit was a temporary, non-refundable 15% tax credit on investment of over CAD1,000 (USD1,000) but restricted to CAD10,000. The tax benefit was therefore limited to CAD1,350 per household.

"We continue to see positive results from our government's Economic Action Plan. Our multi-faceted approach to stimulus kept economic activity going during the recession and Canada is better for it," Laurie Hawn, Member of Parliment for Edmonton Centre, said on behalf of the government.

"By encouraging Canadians to invest in their home with this tax relief, our government gave a timely boost to the Canadian economy that helped maintain jobs in areas such as home renovation, construction, retail, and forestry that could have otherwise been lost to the effects of the recession," added Keith Ashfield, the Minister of National Revenue. "It also put more money back into the pockets of hardworking Canadians for investing in their home, a family's most important investment.”

With support from the HRTC, real spending on residential renovations rebounded strongly in Canada, increasing by an average of 18.1% from the second quarter of 2009 through the first quarter of 2010. Analysts have estimated it pumped an additional CAD4.3bn in renovation investment into the economy, at a time when the recession would have reduced investment in the sector.

The industry, the government said, has been virtually unanimous on the strong positive impact this measure had on the economy. Victor Fiume, National President of the Canadian Home Builders' Association, for instance said:

"The HRTC increased economic activity, created jobs, and demonstrated confidence among consumers in using professional renovators. It's done a lot of good for our industry and for consumers and obviously has kept the industry stronger in these tough times and in job creation as well."

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