Many Canadians relocate from their primary residence for several reasons, maybe for a job or to start their own business, studies or more. Relocating to a new place is expensive and can affect your budget. The good news is that the Canada Revenue Agency (CRA) allows you to deduct the expenses you incurred while moving to a new location from your taxable income. And like all CRA tax benefits, the moving expense deductions apply to specific situations and types of expenses. 

Are You Eligible to Claim Moving and Relocation Expenses?

Relocation expense deduction eases the burden on Canadians who incur it. You could be a tenant or a homeowner and claim this deduction. The CRA allows moving expense deduction if you relocate under the following situations: 

• You shift to a new place for a job, self-employment, or education. Your new home should be at least 40 kilometres closer to your new work location or school from your prior location. You can relocate: 
• within Canada
• from outside Canada to a new location in Canada
• from inside Canada to a new location outside Canada
• between two locations outside of Canada

In any scenario, you should be a deemed or factual resident of Canada.

• You incurred the moving expense and were not reimbursed by your employer. In other words, your income includes the relocation expense. Only then does it make sense to deduct it from your income? 
• You have all the receipts and supporting documentation of the expenses you claim. 

If your answer for all three is yes, you can deduct moving expenses from your taxable income. 

Students moving to take a summer job (even if it is their family home) can claim moving expenses if they meet the above three conditions. One scenario where you cannot claim a deduction is if you are moving within the city to an upgraded neighbourhood. 

How To Identify Types of Moving Expenses Eligible for Tax Deduction? 

After classifying your relocation as eligible, you must see which expenses qualify for the deduction. The base rule is any expense you incurred to change your residence and resettle in a new residence physically is deductible. Here is a broad classification of relocation expenses with details of what is eligible and what is not. While going through this list, ask yourself, is this expense directly linked to relocation? 

Transportation and storage costs: While moving your belongings, you may hire packers and movers, get boxes, tapes and packing material, and pay for in-transit storage and insurance. All this you can deduct. You cannot deduct the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products. 

Travel and temporary accommodation costs: You can deduct the cost of travelling with your family to reside in the new location. It includes vehicle expenses, meals and accommodation for 15 days for you and your family until the new home is set. The CRA has simplified the process by allowing you to claim a standardized cost for meals and travel. For instance, you can claim up to $17 per meal, to a maximum of $51 per day, for every household member. The flat rate travel cost depends on the province from where you start. 

You cannot deduct the travel cost incurred while searching for a job and house at the new location. That is not a direct relocation expense. 

Costs of old house (rented): If your old house was rented, you can deduct the cost of cancelling the lease and the maintenance cost of up to $5,000 for the time it was vacant after you moved. You cannot deduct expenses incurred to clean or repair a rented home to meet the landlord’s standards. 

Cost of old house (owned): If you purchased or sold property in this relocation process, you can deduct the cost incurred to sell or buy the house. It includes advertising, legal fees, real estate commission, mortgage penalties for pre-payment of mortgage, and taxes paid for the transfer or registration of title to the new residence (excluding GST or HST). 

You can also deduct interest, property taxes, insurance premiums, and heat and utilities expenses paid to maintain the old residence till it is sold. However, you cannot deduct any of these expenses if:

• you rented the old house,
• a family member(s) is still living in it, or
• you delayed the sale until you got a better price for the house. 

You also cannot deduct any expense incurred to make your old home more saleable. 

Incidental costs: You can also deduct the cost incurred to change your address on legal documents, replacing driver’s licenses, vehicle permits, and utility connections related to the move. However, you cannot deduct costs incurred for mail-forwarding or mortgage default insurance. 

Other costs you cannot deduct are personal expenses of setting up the house, like installation of household items, transformers or adaptors for household appliances, drapes, carpets, and firewood. The expense deduction is only for necessities without which a relocation is incomplete. And if you have a mobile home, the moving expense deduction doesn’t apply to most things. 

How Does the Moving Expense Deduction Work in Different Situations? 

Once you know that your relocation qualifies for the deduction and are thorough with the expenses you want to deduct, here is how you can claim the deduction. 

Insufficient income: To deduct expenses, you must first earn income from the new location, either from employment or self-employment. If you do not have sufficient income that attracts tax liability, there is no point in claiming the deduction. However, the CRA allows you to carry forward the deduction to next year when you have sufficient income, where a deduction gives you tax benefits.

Expenses are greater than income: There could also be a situation where your relocation expense is greater than your taxable income from the new location. In this case, you can reduce your tax liability to $0 and carry forward the unused expense to next year. 

Employer reimbursements: If your employer reimbursed you some moving expenses, you can still claim the deduction by adding the reimbursed amount to your taxable income or deducting that amount from the moving expense.

Moving expenses paid later: It can also happen that you moved in 2023 but paid moving expenses in 2024. Such a scenario could occur if your old home did not sell for almost a year after you moved to a new home. In such a scenario, you can claim the expenses in your 2024 tax filings with an explanation for the delay in selling your home. 

While you can carry forward moving expenses, you cannot claim them in the prior year’s returns. 

How do you Claim Moving Expenses in Tax Returns? 

Moving expenses might look easy, but when you claim the deductions in the T1-M Form, you must be detailed and ensure you aren’t claiming any ineligible expense. 

Moving expenses is just one of the many tax deductions you can claim. 

Contact Glenn Graydon Wright LLP in Oakville to Help You with Accounting and Tax Filing 

A professional accountant can help you with detailed tax filings and record keeping of all those receipts to ensure you can claim all the benefits and deductions the CRA offers. To learn about how Glenn Graydon Wright LLP can provide you with accounting and tax filing services, contact us at 905-845-6633, or connect with us online, to schedule an initial consultation.