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Home Renovation Tax Credit

In: Business and Management

Submitted By chancez21
Words 261
Pages 2
The Home Renovation Tax Credit (HRTC) is identified as a potential instrument to stimulate the construction market by providing an incentive to home owners to engage in a minimum amount of house renovations (Garland, 2009). It was introduced back in 2009 as a temporary measure to provide a timely stimulus to the Canadian economy when the construction industry needed a boost (Warnica, 2015). Unlike the 2009 credit which resulted in $3 billion in government tax expenditures, the permanent HRTC is going to cost $1.5 billion in tax expenditures yearly and 15 percent annual credit would apply to renovations between $1,000 and $5,000 (McMahon, 2015). The tax credit is presumed to help Canadian families and support Canadian jobs.

The potential benefit of Harper’s Home Renovation Tax Credit is that it will help curb underground activities (CHBA, 2015) and foster household health and safety. With HRTC, there is an incentive for home owners to hire legitimate tax paying professional contractors for home renovations. By requiring receipts to support HRTC claims, home owners will be discouraged from hiring unskilled underground operators- who work for cash and tend to ignore health and safety requirements in home renovations (CHBA, 2015). If home owners claim the tax credit, not only will underground activities in the construction industry reduce, there will be an increase in government revenues (Stinespring, 2011) as legitimate tax paying contractors will gain business that would otherwise have been lost to tax evaders in the underground construction industry made up of 28% (Statistics Canada, 2015) of total Canada’s underground economic activity.…...

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