Claiming Moving Expenses on Your Income Tax

October 28, 2011 by  Filed under: Taxes 

Some people are not aware of the potential tax savings they can have when they move (This helps offset some of the hard costs incurred during the moving process). Here is a quick run down of who can claim moving expenses, what expenses they can claim, and other rules surrounding the claim. Note we will only touch on individuals moving within Canada. If you are moving outside of Canada or into Canada you may still be able to claim moving expenses. You’ll just need to consult a professional to determine if you qualify at that time.

Who Can Claim Moving Expenses?

If you moved during the year to start a new job, establish a business, or to study full time you may be able to claim moving expenses against earned income at your new location.

So how do you qualify?

If you are an employee or self employed, and you are moving within Canada, and you move at least 40KM closer to your new work or place of business…you qualify.

Expenses You Can Deduct

  • Transportation & Storage – packing, hauling, in-transit storage, insurance for household items (Note: Includes boats, trailers, etc)
  • Travel Expenses – vehicle expenses, meals, accommodations to move you and your family
  • Temporary Accommodations – costs for up to 15 days for meals, and accommodations near either residence for you and your family
  • Cancellation Fees – cost of cancelling a lease for your old residence, not including rent owed while you were still living there

When you old residence is sold as a result of your move, eligible costs also include:

  • Legal Fees – relating to the purchase of your new residence, as well as any taxes paid (Not including GST/HST or property tax) for the transfer or registration of the title for the new residence.
  • Selling Costs – for your old residence including advertising, notarial, legal fees, real estate commission, and mortgage penalties

Expenses You Cannot Deduct

  • Expenses incurred to make your home more saleable
  • Losses on the sale of your home
  • Expenses relating to ‘house hunting’ before you move
  • Value of items you cannot move (ie plants, food, cleaning products)
  • Expenses relating to job hunting
  • Expenses incurred to bring a rented residence into line with landlord’s requirements
  • Expenses to replace personal items such as tool sheds, firewood, drapes, etc
  • Mail forwarding
  • Costs relating to the sale of your old home where you delayed selling for investment purposes or to wait until the market improved
  • Expenses for which you were reimbursed by your employer
  • Expenses for which you do not have the required supporting documentation

Additional Considerations

  • You can carry forward unused amounts and deduct them in future periods, but you cannot carry amounts back to prior years regardless of whether or not there was eligible earned income
  • You have the option to claim travel expenses under both the detailed or simplified methods.
  • These rules also apply to students moving away to school, but they can only be applied against scholarships, bursaries, etc that are included in their earned income

This is not a comprehensive list of what is and what isn’t deductible, but can help you at least be prepared for your move, and to realize what type of receipts will need to be kept for income tax purposes. As always consult a professional for personal tax advice.

Michael Kelly is President and CEO of Ledgers (Barrie). Michael’s firm provides professional accounting, bookkeeping, tax preparation services and advice for small / medium sized businesses needing to realize their growth potential, and for individuals seeking to minimize their tax burden.

If you want to view more articles by Michael. Click here for more information about accounting, bookkeeping, and tax preparation.

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