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Can I Claim My Moving Expenses?

05/03/2013


Moving from one residence to another can be an expensive transition, especially if your new residence is located in another city or province. Costs can quickly add up, from renting a moving truck for transporting your belongings or paying for airfare to have your immediate family join you. Keeping receipts for these costs is a good idea because many costs can be deductible for tax purposes.

You are eligible to deduct moving expenses if you move to a new location to be employed, carry on business or become a full-time student at the post-secondary level. To qualify you must secure your employment prior to your move and become a resident at the new location. Your new home must be at least 40 kilometres closer to the new place of work or educational institution.

Moving expenses are only deductible to extent that you have taxable income from the new work or school location. Most scholarships and bursaries are non-taxable; therefore, there will be limited circumstances when moving costs are deductible for educational endeavours. However, students who secure summer employment prior to moving back home for the summer may be eligible to deduct eligible moving costs against summer employment income.

Moving expenses that can be deducted include:

  • Transportation and storage costs;
  • Travel expenses including meals, accommodations and vehicle expense;
  • Temporary living expenses to a maximum of 15 days;
  • Cost of cancelling a lease;
  • Cost to maintain your old residence while it was vacant (maximum $5,000);
  • Cost of selling your old residence including notary/legal fees, real estate commissions and mortgage penalty; and,
  • Cost of purchasing your new residence (only if previous residence was owned not rented).

In addition, the taxpayer has the option of using the detailed or simplified method for calculating the meal and vehicle expenses. Which method you choose depends on your mode of travel and how long it took to travel to your new location.

Choose the method that allows for the largest deduction

It is important to note that if your new employer gave you a reimbursement or allowance for moving expenses, that amount has to be either included in your income or deducted from the moving expenses you are claiming. Since there are many moving expenses that are not deductible for tax purposes, a prudent idea would be to have the employer reimburse for those non-eligible expenses so that you can fully deduct the eligible expenses. Having a letter from your employer outlining what expenses were reimbursed is a good idea.

Generally moving expenses into or out of Canada are not deductible, so you will want to seek professional tax advice if that is your situation.

Please consult myself or your local MNP Tax advisor to determine which plan meets your needs, we would be happy to assist you.