Are Moving Expenses Deductible?

Q: Are moving expenses deductible?

A: The Income Tax Act allows you to deduct eligible moving expenses provided the move is an “eligible relocation”. The relocation must occur to enable the taxpayer to earn income from employment or from self-employment at a location in Canada referred to as “the new work location”. The distance between the new home must be at least 40km closer to the new place of work or self- employment.

For many years, the foregoing definition was presumed to mean that one had to commence work with a new employer. Recent court cases have determined that the meaning of “new work location” did not mean that you had to change employers to qualify, which for most taxpayers, was the reason for the move.

The specific cases inferred that “new work location” includes working for the same employer but with a change in your status. For example, transferring from part-time to full-time employment or modification in your job responsibilities such as a promotion would suffice. Therefore the only remaining requirement was that the foregoing 40km distance test was met.

Eligible deductible moving expenses are deductible to the extent of your income from employment/self-employment subsequent to the move with no time limit on the carry forward period. Eligible and ineligible moving expenses are outlined with the instructions to CRA Form T1-M, available at http://www.cra-arc.gc.ca

You should consult with your professional advisor on all related matters.