Canadians: can I claim moving expenses?

In Canada, generally, you can claim moving expenses you paid in the year if both of the following apply:

• you moved to work or to run a business, or you moved to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution
• you moved at least 40 kilometres closer to your new work or school

Normally you can only claim moving expenses if you moved between locations within Canada. Accordingly, most newcomers to Canada will not be able to claim moving expenses. The only exceptions are where:

• you are a full-time student,
• you were a factual resident, or
• you were a deemed resident.

Employed or self-employed

If you’re employed or self-employed, you can deduct moving expenses only if you’ve earned employment or self-employment income at the new location. You cannot deduct your moving expenses from any other type of income, such as investment income or employment insurance benefits, even if you received this income at the new location.

Full-time student

As a full-time student, you can claim moving expenses paid at the beginning of each academic period as long as you meet the 40-kilometre requirement and you have earned income at your new location. You can only deduct expenses from the parts of your scholarships, fellowships, bursaries, certain prizes, and research grants that are required to be included in your income.

Eligible moving expenses

You can claim the cost of reasonable expenses you paid to move yourself and your family to your new home. Common eligible moving expenses include:

• Transportation and storage costs such as packing, hauling, movers, in-transit storage, and insurance;
• Travel expenses such as vehicle expenses, accommodation, and reasonable amounts for meals that you paid during the moving process for yourself and your family;
• Cost of cancelling a lease for your old home;
• Cost to maintain your old home such as interest, property taxes, insurance premiums and the cost of heating and utilities (up to $5,000) after you moved and while you made reasonable efforts to sell the home. You or another person in your family can’t live in the old home nor can it be rented to any other person while you’re trying to sell it;
• Cost of selling your old home including advertising, notary or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity;
• Cost of purchasing your new home,if you or your spouse or common-law partner sold your old home because of your move;
• Incidental costs for changing your address on legal documents, replacing your driving licences, and connecting and disconnecting utilities;
• Temporary living expenses for up to a maximum of 15 days for meals and temporary lodging near the old and the new home for you and your household members.

Calculation methods

You can either use the simplified method or the detailed method to claim your expenses. The simplified method allows you to use a flat kilometre rate based on the province/territory you’re moving from and a flat rate per meal per day, for three meals. The detailed method requires that you use the amounts shown on all your receipts.

If you choose the simplified method, although you do not have to submit detailed receipts for actual expenses, the CRA may still ask you to provide documents to support your claim.

Employer-paid moving expenses and taxable benefits

You can deduct moving expenses only to the extent that the expenses were incurred by you. You cannot deduct expenses that were paid for by your employer, or that you incurred and were later reimbursed for by your employer.

If an employer reimburses an employee for moving expenses, certain of these expense reimbursements will not be considered a taxable benefit to the employee, while some reimbursements will be considered a taxable benefit.  When the employee has an eligible housing loss, only half of the amount exceeding $15,000 is taxable.

If the benefit to the employee is taxable, then CPP contributions and income tax must be deducted.  If the taxable benefit is paid in cash, employment insurance (EI) premiums must be deducted.  Non-cash benefits are not subject to EI.

Unused moving expenses available to carry forward

If your moving expenses are more than the income you earned (including scholarships) at your new location, you can carry forward all or part of your moving expenses. This means you can deduct the carried forward amount from the same type of income in a future tax year to lower your tax payable.

If you move again before claiming your carry forward amount, any moving expenses you didn’t claim previously will be lost.

About author Lina Wang