Moving in Canada often entails expenses related to the move that are tax deductible. Moving comes with a multitude of different kinds of stressors, life changes, and financial costs. But can you write off moving expenses if you change jobs?
If you are a Canadian resident who is moving due to new employment or a change in employment location, as well as for business purposes, you may be eligible to deduct moving expenses.
The Income Tax Act states that you must move at least 40 kilometers closer to your new employment or business location in order to claim these expenses as tax deductible expenses. It could involve moving to a new province or transferring to another location within the same company.
You can also move within the same province – the only requirement is that you move at least 40 kilometers closer to your new place of employment or business. As long as you satisfy the requirements, you are eligible to deduct the moving expenses listed below on your personal tax return, regardless of whether you are a homeowner or a tenant.
Disclaimer: It should be noted that the information presented is only of a general nature, may omit many details and special rules, and is only current as of its publication date, and cannot therefore be regarded as legal or tax advice. If you would like more information on this subject and how it applies to your specific tax or financial situation, please contact your lawyer, accountant, or relevant governmental institution.
Who Can Claim Moving Expenses?
Individuals who have moved to be employed or to operate a business at a new location are entitled to tax deductibles on eligible moving expenses. The move must be from the place where you ordinarily live to another place where you will ordinarily live, and you must be a deemed or factual resident of Canada.
The new home may be eligible for the tax deduction if it is within 40 kilometers of your new place of work (according to the Income Tax Act). It includes moving in Canada, moving from outside Canada to a new workplace in Canada, moving from Canada to a new workplace outside of Canada, and moving between two locations outside of Canada. Full-time students may also be eligible to deduct the moving expenses from part of their scholarships, fellowships, bursaries, and research grants that are required to be included in income.
Furthermore, claiming is not dependent on your status. Homeowners and tenants both have options. As long as you meet the requirement of moving to a location that is at least 40 kilometers from the employment location, you can claim moving expenses on your personal tax return.
What Are the Conditions For Students to Claim Moving Expenses?
For those who move to attend college, university, or other post-secondary schools full-time, moving expenses can be deducted from their taxes. It applies even if you are moving outside of Canada as a Canadian citizen. In order to qualify for this program, you must have sold or stopped renting your current home in order to move into your new home. You cannot deduct moving expenses from your taxes if you keep your current residence while moving to your new home.
Students who attend a university, college, or other educational institution can claim moving expenses if their new residence is at least 40 kilometers closer to their school. When you return to school after summer break or a semester away from school, you can deduct the expenses paid. Co-op students can also deduct moving expenses.
In order to claim moving expenses, students must have taxable income from awards (scholarships, fellowships, bursaries, certain prizes, or research grants) at the new location. You can deduct moving expenses only from you taxable award or your employment income from where you moved.
Under What Conditions Can Employees and Self-employed people Claim Moving Expenses?
- Employees may claim moving expenses if they are moving to a new company or taking a transfer with their current employer.
- Self-Employed persons with a business at a new location may claim moving expenses. You can deduct eligible moving expenses from your income earned at your new location.
- You can only deduct moving expenses against the net income earned at the new location. Therefore, you may need to do a separate calculation to determine how much you can claim. For example:
- In the case of an employee who is transferred to a new location with the same employer, if your income from the year is reported on one T4 slip, you will need to determine how much of that income was earned after the move.
- As a business owner, if you relocate your business to be closer to a market or resource, you must determine the net self-employment income earned at the new location.
- Your new home must be the place where you and your family normally live.
- Moving expenses may be claimed by employees who work from home and have to provide a home office as a condition of employment.
Can I split my moving expenses with my spouse?
You can split legitimate moving expenses for a family move with your spouse if that maximizes your deduction or you can have the spouse with the higher marginal tax rate claim the entire amount.
What Types of Expenses Can You Claim?
You can deduct eligible moving expenses.
Transportation and storage costs are common, which include all movers, in-transit storage, packing, and insurance. Travel expenses to the new location, including vehicle expenses, meals, and accommodations for you and your family members are all eligible.
The Canada Revenue Agency (CRA) offers taxpayers two options for claiming vehicle and meal expenses: a flat rate or the actual expenses. The flat rate for vehicles changes every year, and the meal rates vary by province and territory. On the websites of the CRA and the Internal Revenue Service, you can use the flat-rate method (also known as the simplified method). Please keep in mind that you may be required to provide some documentation to support your claim. In any case, you must keep track of a year’s worth of car-related expenses, such as gas, maintenance, interest on your car loan, and insurance.
Whenever you plan on claiming your moving expenses, make sure to periodically visit the CRA website to review its flat rate.
You can deduct temporary living expenses (for up to 15 days), which includes meals and lodging for you and your family. You can also claim the costs associated with terminating your old lease and paying to maintain your old residence (up to $5,000) when it was vacant after you moved.
As long as they are related to the move, incidental costs, such as changing your address on legal documents, replacing driver’s licenses, vehicle permits, and utility hook-ups and disconnection, are tax deductible. If, as part of the move, you acquired or sold property, you can deduct those selling costs, such as advertising, legal fees, real estate commissions, and mortgage penalties, if applicable.
Eligible Moving Expenses
From selling to transportation, here is a detailed list of eligible moving expenses you can claim:
- Travel expenses (e.g., automobile expenses)
- Costs of moving belongings (e.g., hiring a moving van and storage)
- Costs for a maximum of 15 days for you and your family (e.g., meals and accommodations on the way to the new home)
- Costs of canceling your lease on the old residence
- Costs of selling your old residence (e.g., advertising and legal fees)
- Costs of maximum $5,000 for maintaining the old residence once it’s vacant (e.g. mortgage interest and property taxes)
- Legal fees and land transfer fees paid during the purchase of a new home once the old home has been sold as a result of the move
- Fees for utility disconnection and hook-ups
- Miscellaneous costs (e.g., changing your address and purchasing a new driver’s license)
Note: An eligible moving expense can only be deducted from employment or self-employment income earned at the new location. When your moving expenses exceed your income at the new location for the same year, you will be able to carry over the excess to the following year if you are unable to claim the total amount of your moving expenses in the current year.
How Do You Claim the Expenses on Your Tax Return?
Calculate the moving expenses that you can deduct on line 21900 of your T1 by using form T1-M, Moving Expenses Deduction. You do not have to attach the T1-M form to your return, nor do you have to attach all the receipts and documents to support your claim, but you must keep the receipts and documents on hand in case the Canada Revenue Agency asks for them.
- During your new job location, your reasonable claim should be subtracted from your income.
- Personal vehicle and meal expenses can be claimed without receipts. You can deduct 57 cents per kilometer if you drive your own car to the new location in Ontario. It depends on the province or territory where the trip begins how much it costs per kilometer. Costs vary from 48.5 cents in Alberta to 65 cents in Yukon. In addition, each household member can deduct $51 per day for meals during the move, up to a maximum of 15 days. Every year, the CRA updates the standardized meal and travel expenses.
- Every move is considered separately. Even if you return to your original location and employer within the same tax year as your first move, moving expenses would still be tax deductible.
- When you sell your residence to move to a new job, you should always deduct the selling costs as moving expenses instead of adding them to the cost of your residence. This will allow you to deduct the full amount on your income tax return.
- The list of expenses above is not exhaustive. If you believe you have other moving expenses, your accountant can advise you.
- Canada Revenue Agency (CRA) does not allow the claimation of certain costs. The following are some of these limitations:
- Renovation costs to make the previous residence more saleable.
- Losses on the sale of the previous residence.
- Costs associated with job-hunting and house-hunting (this includes trips to a new city/province to look for residence)
- Mail forwarding expenses
- Mortgage default insurance
- For a more detailed list of what is not claimable please speak to your financial advisor.
References and Resources
For more information, checkout the following articles by the CRA.
- Canada Revenue Agency: Can You Claim Moving Expenses?
- Canada Revenue Agency: T1M – Moving Expenses Form
- Canada Revenue Agency: Income Tax Folio – Moving Expenses
- Line 21900 – Moving Expenses
- Income Tax Package – Guide, Return, and Schedules
- Form T1-M, Moving Expenses Deduction
- Income Tax Folio S1-F3-C4, Moving Expenses
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