2021-0894121E5 Retrofit loans for homeowners
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: What are the tax implications to Canadian homeowners who receive a loan under stream 1 of the Canada Greener Homes Loan Initiative?
Position: The amount of the loan received will not be included in the income of the recipient for income tax purposes. Interest expense, default charges, customary costs, and expenses for administration, monitoring and enforcement will not be deductible for income tax purposes.
Reasons: The loans under stream 1 of the Canada Greener Homes Loan Initiative are obtained for personal use, for purposes of acquiring retrofits to improve the primary residence of the homeowner.
Section: 9, 12(1)(x), 20(1)(c), 20(1)(e), 20(1)(e.1), 80.4(1)
Chris Brennan, CPA, CA
January 12, 2022
Re: Canada Greener Homes Loan Initiative
This is in reply to your request for our views on the income tax implications to the recipients of loans under stream 1 of the Canada Greener Homes Loan Initiative (CGHLI).
Based on the information you have provided, it is our understanding that the loans under stream 1 of the CGHLI, are interest-free non-forgivable loans available to Canadian homeowners to complete deep home retrofits to their primary residence.
It is our view that an amount received in respect of a loan to the homeowner for the personal use of acquiring retrofits to improve their primary residence should not generally be included in their income, and therefore, will not be taxable under the Income Tax Act (Act).
In addition, in the event of a loan default, the recipient will not be able to deduct any interest expense under paragraph 20(1)(c) of the Act on the CGHLI loan obtained for personal use. Furthermore, the recipient will not be able to deduct default charges, customary costs, and expenses for administration, monitoring and enforcement under paragraphs 20(1)(e) and 20(1)(e.1) of the Act .
I trust the information provided is helpful.
Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.
© Her Majesty the Queen in Right of Canada, 2022
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2022
Video Tax News is a proud commercial publisher of Canada Revenue Agency's Technical Interpretations. To support you, our valued clients and your network of entrepreneurial, small businesses, we choose to offer this valuable resource to Canadian tax professionals free of charge.
For additional commentary on Technical Interpretations, court cases, government releases, and conference materials in a single practical document specifically geared toward owner-managed businesses see the Video Tax News Monthly Tax Update newsletter. This effective summary and flagging tool is the most efficient way to ensure that you, your firm, and your clients are fully supported and armed for whatever challenges are thrown your way. Packages start at $400/year.