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Tax credit a boon for home contractors

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CTV News: Graham Richardson on Canadians cashing in
It's part of the federal governments tool kit to fix the economy and just a couple of months after the home renovation tax credit was unveiled, it already appears to be a hit with Canadians, but the new credit has also exposed a potential crack in Canada's revenue audit system.

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Date: Sat. Apr. 4 2009 11:44 PM ET

Home improvement contractors say prospects heading into the spring season are looking good, despite the economic slump griping the country.

And as the weather heats up, so are job orders for roofers, window repair crews and home renovation contractors.

"We're optimistic now ... we were a little bit worried earlier in the year (but) now it's going to be a decent year, business wise," Donald Mann, a roofing contractor based in the Ottawa area, told CTV News.

One reason why business is good: Ottawa's new home renovation tax credit.

The tax credit allows Canadians to claim up to $1,350 in credits for home improvement projects, which Ottawa hopes will be a boon for both the construction industry and the slumping economy as a whole.

Essentially, any home improvement project qualifies for the tax credit, including repairs on houses, condos and cottages. Homeowners can even claim the credit on door replacement, window repairs and new sod for their yards.

Tony De Bartolo, who runs a window installation company, said the policy is spurring Canadians to fix up their homes.

"It's no different from people using their Visa cards to collect points," he said. "Incentives are there people are going to take advantage of that," he said.

In fact, the government expects Ottawa expects 4.6 million Canadians to cash in on the one-time home renovation tax credit.

However, the program's very success is also raising questions about the government's ability to proper monitor the tax credit.

In fact, Canadians will only be required to send a receipt for their renovations if they are audited by the Canada Revenue Agency, raising concerns that the system could be abused.

Earlier this week, Canada's auditor general warned that Canada's tax agency is letting too many taxpayers get away with cheating on their returns.

With files from CTV's Graham Richardson

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