New and upgraded tax credits coming for clients

The federal government is moving ahead with new or enhanced tax credits for surrogacy, first-time home buyers, and renovation expenses for multigenerational households.

The Department of Finance published draft legislation on Tuesday to implement a number of measures introduced in the 2022 budget or earlier. Tax credits that may benefit certain clients are among them.

Multigenerational home renovation tax credit

The refundable credit allows families to claim up to $7,500 to build a secondary unit in their home to accommodate seniors or adults with disabilities. Starting in the 2023 tax year, the credit will cover 15% of up to $50,000 in renovation and construction costs.

To qualify, the secondary unit must be a self-contained housing unit with a private entrance, kitchen, bathroom and sleeping area.

The home may be owned by the senior or adult with a disability (the “qualifying individual”), a family member (the “qualifying relation”) or a trust.

The qualifying individual or their cohabiting spouse or common law partner can claim the credit, and so can a qualifying relation.

The qualifying individual can only use the credit once in their lifetime. A maximum of $50,000 can be claimed by all taxpayers for the same renovation.

The credit does not cover recurring repair and maintenance, appliances or housekeeping and similar services.

To be eligible, the house or unit must be inhabited (or “reasonably expected” to be inhabited) within 12 months of the renovation ending.

The department’s explanatory notes provide additional details.

Medical expense tax credit for surrogacy and other expenses

Under the Liberals’ draft legislation, surrogacy and donor expenses for would-be parents will now be eligible for the medical expense tax credit.

While it’s illegal to pay surrogate mothers or donors in Canada, they may be reimbursed for some expenses. The new legislation will allow reimbursed expenses related for “surrogacy, donating sperm or ova, or maintenance and transport of an in vitro embryo” to be eligible for the medical expense tax credit.

The change applies beginning in the 2022 tax year.

First-time home buyers’ tax credit

The Liberals are also moving ahead with a promise to double the tax credit for first-time home buyers beginning in the current tax year.

Previously, new buyers could claim up to $5,000 on a home purchase and receive a credit of up to $750. The amount has now doubled to $10,000, with a maximum credit of $1,500.

The draft legislation is out for comment until Sept. 30.