What are the rules for claiming moving expenses in Canada?

The Moving Expenses Deduction allows an individual to deduct certain expenses incurred when moving from one residence to another to start a new job or carry on or start a business in a new location. This is a deduction from income, not a non-refundable tax credit.

Eligibility Criteria:

To qualify, you must move a minimum distance of 40 kilometers (about 25 miles) closer to your new place of employment or business. Furthermore, the move must be for the purpose of establishing yourself in a new location where you intend to be employed or self-employed on a full-time basis for at least six weeks during the year following the move.

Deductible Expenses:

The Canada Revenue Agency (CRA) permits the deduction of reasonable expenses directly related to the move. These typically include:

• Transportation Costs: Costs for moving your household goods and personal effects (e.g., movers' fees, truck rental).
• Travel Costs: Reasonable costs for meals and lodging while moving your family and goods to the new location.
• Storage Costs: Costs for storing your household goods in transit.

Non-Deductible Expenses:

It is important to note what cannot be claimed. Expenses such as costs associated with selling your old home (real estate commissions, legal fees), breaking a lease, or purchasing a new home are not deductible as moving expenses. These may sometimes be factored into the calculation of capital gains on the sale of the previous residence.

Claiming the Deduction:

Moving expenses are reported on Line 21900 of your T1 Income Tax and Benefit Return. If your moving expenses exceed your employment income in the current year, you can carry forward the unused amount to future years, provided you still meet the eligibility criteria for those years. You must attach a completed Form T1-M, Moving Expenses Deduction to your return, detailing the costs incurred.

If your employer reimbursed you for some or all of your moving expenses, you must report that reimbursement as income (usually on your T4 slip), and you can only deduct the expenses that were not reimbursed.