Canadians can deduct certain moving expenses on their tax return. But not everyone can claim moving expenses and not all expenses are eligible moving expenses.
Who Can Claim Moving Expenses?
First, in order to claim moving expenses, you must be a de facto or deemed resident of Canada. Full-time students going to school abroad must also be de facto or deemed residents of Canada if they want to claim moving expenses.
Second, a person can claim eligible moving expenses if they move from an old permanent residence to a new permanent residence in order to start a new job, start a new business, or go to school full-time, and the new residence is more than 40 km closer to the new job or school than the old residence.
If you meet these requirements, you can deduct your moving expenses from the income earned at your new job on your tax return. Like the RRSP, moving expenses are deducted from your taxable income up to the amount of income earned from the new job in the year of moving. If you don’t have enough income from your new job in the current year, you can carry over unused moving expenses to future years. If you move again before unused moving expenses are used up, any unused moving expenses will be forfeited.
Some employers will reimburse employees for moving expenses or provide a moving allowance. In this case, you can only claim moving expenses on your tax return if you include the employer’s payments in your income for the year or deduct the employer’s assistance from your moving expenses.
Additionally, moving expenses are not limited to moves within Canada. You can claim moving expenses for moves between countries as long as you meet the requirements for a de facto or deemed resident of Canada. However, new immigrants who do not meet the requirements for Canadian residency before arriving in the country cannot claim moving expenses.
Eligible moving expenses
· Transportation and storage costs
· Travel expenses for moving: including reasonable car, meals and lodging expenses
· Temporary living expenses: up to 15 days of temporary accommodation and meals
· Cost of cancelling the lease of the old residence
· Incidental costs: including change of address, change of driver’s license, license plates, and utility disconnection/connection fees
· Cost to maintain your old home when vacant (maximum of $5,000): including mortgage interest, land taxes, insurance and utilities
· Cost of selling your old home: including advertising, brokerage, attorney fees and mortgage penalties
· Cost of buying your new home: including legal fees, land transfer taxes, and land registration fees
Please note that you can claim the cost of buying the new home only if you or your spouse sold your old home because of your move.
There are two methods of calculating the cost of moving travel (including car and meals): the detailed method and the simplified method.
For the detailed method, you must keep the relevant receipts and report the actual amount on these receipts. The simplified method does not require documentation and is based on a flat rate set by the CRA. 2021 rates are $23 per meal, up to $69 per day for meals and $0.575 per kilometre for a car if in Ontario. (rates vary from province to province).
Non-eligible moving expenses
• expenses for work done to make your old home more saleable
• any loss from the sale of your home
• travel expenses for house-hunting trips before you move
• travel expenses for job hunting in another city
• the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products
• expenses to clean or repair a rented home to meet the landlord’s standards
• expenses to replace personal-use items such as toolsheds, firewood, drapes, and carpets
• mail-forwarding costs (such as with Canada Post)
• costs of transformers or adaptors for household appliances
• costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved
• mortgage default insurance
How to claim moving expenses on your tax return?
You can calculate eligible moving expenses using T1-M form and claim the amount on line 21900 of your T1 tax return. You do not need to send receipts or T1-M form to CRA when you file your return. However, you must keep these receipts and documents in case CRA requests that you provide support for your claim.