Moving can be stressful, not to mention expensive. Whether you are moving because of your growing family, job relocation, downsizing, retirement, or school, your finances will be affected by the costs. However, depending on the circumstances of your move, you may be eligible for tax relief from the government.
Under Canada’s Income Tax Act, if you are relocating as a result of a new job or a job transfer, or because you are enrolling as a full-time student at a post-secondary institution, you are entitled to deductions to help off-set your moving costs. In order to claim these expenses, there are several other conditions you must also meet. Regardless of whether you are a student or, an individual moving for work, your new home is required to be:
- a minimum of 40 km closer to your new work or school (by the shortest regular public route) and,
- established as the place you normally reside.
Moves generally must be between two locations in Canada. However, under some circumstances you can also claim the deductions if you move to or from Canada; or even between two locations outside of Canada. If you are moving to or from Canada, you must be a full-time student, a factual resident, or a deemed resident of Canada. If you are moving between two locations outside of Canada, you must be a factual or deemed resident.
If you are moving as a result of a new job or a job transfer, you can deduct all eligible moving expenses only from the income you earn at your new work location; income from investments or employment insurance benefits are strictly excluded. Moreover, if you were reimbursed or received an allowance from your employer for the move, you are only allowed to claim the portion of the expenses you paid for in excess of the amount of reimbursement or allowance.
In the case of a student relocating for school the same rules apply. If you are attending a post-secondary institution full-time, the eligible moving expenses can only be deducted from the portion of the bursary, fellowship, scholarship, or research grant income included in your taxable income for the year. However, if you are a student who moved for a summer job, you are able to deduct the expenses from your employment or self-employment income at the new location. These costs can be claimed at the beginning of each academic term provided the aforementioned requirements are met.
Regardless of whether you are a student, employed or self-employed, you can carry forward any unused moving expenses to future years. Or if you have a spouse or common-law partner, you can split the expenses for a family move with them.
The Canada Revenue Agency lists eligible moving expenses on its website. They include the following:
- transportation and storage costs: movers, insurance and packing for household goods;
- travel expenses: fuel, car maintenance, meals and accommodation to move from the old home to the new one;
- temporary living expenses: meals and temporary accommodation for up to 15 days;
- incidental costs: address change on legal documents, replacing your driver’s license and utility hook-ups/disconnections;
- cost of cancelling a lease for your old residence;
- cost to maintain your old residence: interest, property taxes, insurance, utility expenses up to $5,000 when your old home is left vacant after you move, and during which reasonable efforts were made to sell the home including and
- cost of selling your old home and purchasing of your new home: advertising, legal fees, real estate commission, and mortgage penalty if the mortgage is paid off before maturity.
If you would like more information on moving expenses, or other programs that can help you, your family, or your business, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.