Home Accessibility Tax Credit in Canada

If you are making renovations to your home to make it more accessible for senior citizens or someone who is differently abled in your family, then it may be eligible for home accessibility tax credit. In this article we’ll understand all that you need to know about Home Accessibility Tax Credit in Canada – what is it, who is eligible for it, key features, and benefits.

Basics of Home Accessibility Tax Credit

The Home Accessibility Tax Credit (HATC) is a non-refundable tax credit program in Canada designed to provide financial assistance to individuals who undertake eligible home accessibility renovations. The purpose of the credit is to encourage Canadians to make modifications to their homes that improve accessibility and address mobility issues, particularly for individuals with disabilities or seniors facing challenges in daily living activities.

Key features of Home Accessibility Tax Credit (HATC) –

• Eligible Expenses

The HATC covered expenses related to home renovations that improve accessibility for individuals with mobility limitations or functional impairments. Eligible expenses included the cost of installing wheelchair ramps, handrails, walk-in bathtubs, wheel-in showers, grab bars, and other modifications.

• Claimable Amount

The credit allowed eligible individuals to claim a specified percentage of the qualifying expenses. The total claimable amount was subject to a maximum limit.

• Qualifying Individuals

The HATC was available for individuals who were 65 years of age or older at the end of the taxation year or individuals who qualified for the Disability Tax Credit.

• Income Tax Credit

The HATC was a non-refundable tax credit, meaning it could reduce the amount of federal income tax owed but could not result in a refund on its own.

Home Accessibility Tax Credit eligibility

To be eligible to claim the Home Accessibility Tax Credit (HATC), certain criteria must be met. Firstly, you must be identified by the Canada Revenue Agency (CRA) as either a qualifying individual (either eligible for the Disability Tax Credit at any point in the year or 65 years or older at the end of the year) or an eligible individual, which may include the spouse or common-law partner of a qualifying individual.

Individuals who are 65 years or older and those who possess a valid Disability Tax Credit (DTC) are recognized as qualified for the Home Accessibility Tax Credit (HATC). Qualified individuals have the option to directly claim this credit for eligible home accessibility renovations.

If you are providing support to someone who qualifies directly, you may be eligible to claim the HATC on their behalf. Additionally, if you claim the amount for an eligible dependent, caregiver amount, or amount for infirm dependents aged 18 or older for the qualifying person, you may also meet the eligibility criteria for the Home Accessibility Tax Credit.

Expenses that qualify for HATC

Typically, renovations qualify for the Home Accessibility Tax Credit (HATC) if they enhance accessibility, improve safety, and are of a permanent nature. Examples of eligible renovations encompass –

• Installation of grab bars and handrails
• Addition of walk-in tubs or wheel-in showers
• Widening doorways to facilitate wheelchair accessibility
• Lowering cabinets for improved reach

Expenses that are ineligible for the HATC include –

• Costs associated with purchasing a property that the qualifying individual can use without the need for a qualifying renovation
• Recurring or routine maintenance and upkeep costs
• Household appliances
• Any electronic home entertainment devices
• Costs for services such as maintenance, housekeeping, or security
• Expenses related to financing for the qualifying renovation
• Costs incurred for renovations primarily aimed at increasing the home's overall value

Benefits of HATC

The Home Accessibility Tax Credit (HATC) in Canada offers several benefits for eligible individuals who undertake qualifying home accessibility renovations. As of my last knowledge update in January 2022, here are some key benefits associated with the HATC –

• Provides Financial Assistance

The HATC provides a non-refundable tax credit, allowing eligible individuals to reduce their federal income tax payable. The credit is calculated as a percentage of qualifying expenses related to home accessibility renovations.

• Accessibility Improvements

The credit encourages individuals to make improvements to their homes that enhance accessibility and address mobility issues. This includes modifications that make daily living activities more manageable for individuals with disabilities or seniors.

• Flexibility in Claiming Expenses

Many home accessibility renovations that qualify for the HATC may also be eligible as medical expenses. This provides flexibility, allowing individuals to claim the same expense for both the HATC and as an eligible medical expense.

• Provincial Credits

In addition to the federal HATC, some provinces, such as British Columbia and New Brunswick, offer additional provincial credits for home accessibility renovations. This can further enhance the overall financial benefits for eligible individuals.

• No Income Limits

Unlike some other tax credits, the HATC does not have specific income limits. This means that individuals, regardless of their income level, may be eligible to claim the credit as long as they meet the qualifying criteria.

• Threefold Claiming

In certain situations, a single expense for a home accessibility renovation may be claimed three times on the tax return—once for the federal HATC, once for the provincial credit (if applicable), and once as an eligible medical expense.

How to claim HATC?

To claim the Home Accessibility Tax Credit (HATC) in Canada, you can follow these general steps. Keep in mind that these instructions are based on information available as of my last update in January 2022, and you should verify with the most recent guidelines from the Canada Revenue Agency (CRA) –

• Keep the required documentation ready

Retain all relevant documentation and receipts related to the eligible home accessibility renovations. This documentation will serve as evidence when claiming the credit.

• Complete Schedule 12

You need to use Schedule 12, "Home Accessibility Expenses," to claim the HATC. Complete the schedule by providing details about the qualifying expenses, including descriptions and amounts.

• Calculate the Credit

Calculate the total amount of eligible expenses for the HATC. The credit is typically calculated as a percentage of the total qualifying expenses, subject to a maximum limit.

• Report on Tax Return

Include the calculated Home Accessibility Tax Credit on your personal income tax return. This is usually done by entering the relevant information on the appropriate line of your tax return.

• Submit Supporting Documents

While filing your tax return, you may not need to submit receipts or documentation. However, it is essential to keep these documents in case the CRA requests verification.

• Consult with a Tax Professional

If you have questions or uncertainties about claiming the HATC, consider consulting with a tax professional. They can provide personalized advice based on your specific situation.

• Check for Updates

Tax laws and regulations can change, so it's advisable to check for any updates or changes to the HATC guidelines on the official CRA website or consult with a tax professional for the most current information.

Double (or triple) Credit

Numerous accessibility renovations may also qualify as eligible medical expenses. If an expense meets the criteria for both the Home Accessibility Tax Credit (HATC) and as a medical expense, you have the option to claim it for both. Moreover, certain provinces, including British Columbia and New Brunswick, offer an additional provincial credit. Consequently, a single expense may be claimed three times on your tax return.

Frequently Asked Questions (FAQs)

1. Can renters also benefit from HATC?

As per the last update in January 2022, update in January 2022, the Home Accessibility Tax Credit (HATC) in Canada was generally designed for individuals who own their homes. Renters, unfortunately, were not eligible to directly claim the HATC for home accessibility renovations.

The HATC typically applied to eligible expenses related to modifications made to a qualifying individual's principal residence, with the intention of improving accessibility or addressing mobility issues. Since renters do not own the property, they were not eligible to claim the HATC directly.

2. Does HATC have any income limits?

There are no income limits specifically imposed for eligibility to claim the Home Accessibility Tax Credit (HATC). However, to qualify for this credit, you must be categorized by the Canada Revenue Agency as either a qualifying individual or an eligible individual. Income limits are not a determining factor; instead, meeting the criteria set by the CRA is essential to be considered eligible for claiming the HATC.