It’s that time of year again…no not Christmas (I wish). It’s tax season. It’s time to get organized to file your taxes on time and with the maximum deductions possible. Moving can be one of those tax deductions. Below are general guidelines for moving within Canada.
As with all things government related, there are conditions that need to be met in order to receive a tax deduction. You can claim eligible moving expenses only under certain circumstances. Generally speaking, the law applies to a move that was made as a result of work or to run a business at a new location. Example: If the company you work for transfers you to another location and you move to be closer to that employer’s new location, this is deductible. This could mean moving to another province or to a company’s new location outside town. The only requirement for distance is that your new home must be at least 40 kilometers closer to the new place of work. And this is not measured by how the crow flies; it is based on utilizing the shortest, usual, public route.
Are you a Student moving to be closer to your place of education? This is also tax deductible. The rules that apply above also apply to students who move to be closer to the school they attend. You must be attending the school full time and enrolled in a post-secondary program at a university, college or other legal educational institute.
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Of course, there is always fine print to these general rules. These rules only apply to Canadian Residents, either deemed or factual. The qualifications for your residency status can be quite complex. Rules regarding this can be found here. The form you must submit to receive these deductions is Form T1-M, Moving Expenses Deduction. This form is used to calculate the amount of the deduction on line 219 of your tax return.
Did your company or business reimburse you for your move? This is income and must be reported on your income tax. However you can still claim moving expenses; but this income must be included. If you moved late in the tax year and started work at that new company and the income you earned was less than the moving expenses, you can carry forward the unused expenses to the next tax year. So keep track and don’t lose those expense receipts for moving. You can also claim the expense the year after your move if; for example, your old residence did not sell until after the year of your move. For example, if you moved in 2015, but did not pay expenses until 2016, you can claim the expenses for the 2015 move on your 2016 tax return.
Items you can use for tax deduction must be related to the move such as:
There are also a number of items you cannot use as a tax deduction. So make note of these and don’t try to submit them. You only open yourself up to a potential audit. As stated above you cannot get a tax deduction if your move is less than 40 kilometers closer to you job or school. If your employer reimbursed you money for moving, those expenses are not tax deductible. Don’t forget you must keep a record of all expenses for at least three years (in case of audit). The cost of moving a mobile home is not deductible; however, you can deduct the estimated value of moving the personal affects that are in the mobile home. Other non-deductible expenses are:
These are a list of the most obvious and common deductible and non-deductible items related to moving for work or education. For a more detailed list and additional information visit the Canada Revenue Agency website.
