Tips on home reno credit

Sunday, February 7th, 2010

If you run a business, you may lose exemption

Tony Gioventu

Dear Condo Smarts: Do strata corporations have to file tax returns? We are a 24-unit townhouse complex. Our budget is limited to insurance, landscaping and building maintenance. Our strata fees are $250 a month and we always break even on the year. An accounting office told us not to bother as we don’t pay taxes. We’re also confused about how to give owners receipts for the home renovation tax credit.

Marjorie Simpson, Qualicum

Dear Marjorie: Strata corporations are mostly classed as non-taxable corporations under tax laws, but not all strata corporations are tax exempt.

Industrial, commercial, retail, food and hotel strata aren’t necessarily tax-exempt. Even a residential one isn’t tax exempt if it’s running a commercial enterprise. Any profits must be included in its income and it will not be considered non-profit.

The following from CRA FORM IT-304R2 is very clear: “Paragraph 150(1)(a) of the Income Tax Act, requires all corporations, including condominium corporations, to file an income tax return each year, even if they are exempt from paying tax under Part I. A residential condominium corporation that qualifies as a non-profit organization under paragraph 149(1)(l) is exempt from Part I tax on its taxable income, but is required to file Form T1044, Non-Profit Organization (NPO) Information Return, with its T2 tax return. Although it is a question of fact whether a particular condominium corporation qualifies for an exemption under paragraph 149(1)(l), most residential condominium corporations qualify as non-profit organizations within the meaning of this paragraph.”

A home renovation tax credit statement from the strata corporation must contain:

the vendor/contractor’s name, business address and GST/HST registration number

a description of the work and when it was performed.

In addition to giving owners the above, the strata corporation should keep the following:

the vendor/contractor’s name, business address and GST/HST registration number

description of the goods, purchase and delivery date (keep your delivery slip as proof ) and/or when the work or services were performed

– work description, including the address where it was done

amount of the invoice

– proof of payment — invoices must indicate “paid” or be accompanied by other proof of payment, such as a credit card slip or cancelled cheque.

Visit the CRA at or CHOA @ Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him at [email protected]

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