A federal government program designed to stimulate the Canadian economy appears to have been a boon for home improvement retailers in the United States.
The $3-billion home renovation tax credit (HRTC) was introduced last year to help spur the economy during the recession.
But a number of accountants in Winnipeg say Manitobans crossed the border for better deals before claiming the merchandise as part of the HRTC.
Bob McKenzie, owner of Principal Accounting and Tax Consulting Services, said he has come across numerous receipts from American-based stores like Lowes and Menards as he prepares tax returns for clients.
He questioned whether that was allowed, but the Canada Revenue Agency assured him it was covered.
McKenzie thinks the government neglected to close the loophole.
“The Department of Finance maybe just overlooked that and forgot to exclude that. I don’t think the intention of the law is to allow purchases outside of Canada, but nevertheless, it’s happening,” he said.
According to North Dakota’s tax office, in the past nine months Canadians have made more than 10,000 purchases worth more than $4 million at Menards stores in Grand Forks and Minot alone.
Under the HRTC, Canadians can claim expenses of more than $1,000 but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350.
The credit applies to goods or services purchased as part of improvements to a house, condo or cottage between Jan. 27, 2009 and Feb. 1, 2010.
A last minute rush to qualify for the Home Renovation Tax Credit pushed retail sales up 0.7 per cent in January, according to government data.
Home improvement stores were the largest contributor to the month’s $35.7 billion in retail sales, Statistics Canada said.
The deadline to qualify for a maximum HRTC rebate of $1,350 was Feb. 1. The popular temporary program was part of the federal government’s Economic Action Plan designed to boost spending.
Sales at building and outdoor home suppliers were up 7.4 per cent marking the highest monthly growth rate for this retail segment since Aug. 2003.