Relocating to a new city or province can be a daunting process, especially when it’s for a new job or business opportunity. The good news is that the Canada Revenue Agency (CRA) allows you to claim certain moving expenses on your tax return. This can help offset some of the costs associated with your move, provided you meet specific eligibility criteria. In this blog, we’ll cover everything you need to know about claiming moving expenses, how to determine eligibility and the types of expenses you can claim.
Who Can Claim Moving Expenses?
You can claim moving expenses on Line 21900 of your Canadian tax return if you meet the following conditions:
- Employment or Self-Employment: You moved to a new home to start a new job or to run a business.
- Full-Time Student: You relocated to pursue full-time studies at a post-secondary institution.
- Distance Requirement: Your new home must be at least 40 kilometers closer to your new place of work or educational institution.
- Residence Requirement: You must live in your new home to qualify for these deductions.
Note: You cannot claim moving expenses against other types of income, such as investment income or employment insurance benefits, even if you received these at the new location.
Claiming Reimbursed Moving Expenses
If your employer reimbursed or provided an allowance for some or all of your moving expenses, you can only claim these expenses if:
- You include the amount received in your income, or
- You reduce your moving expenses by the amount received.
Carry Forward Unused Moving Expenses
If you were unable to claim all your eligible moving expenses in the current tax year, you can carry them forward to a future year. This can be particularly useful if you expect a higher income in future years.
Eligible Moving Expenses
Here’s a list of moving expenses that you can claim to help reduce your tax burden:
- Transportation and Storage Costs:
1. Includes insurance, movers, hauling, and in-transit storage for your household items.
- Travel Expenses:
2 . Meals, accommodations, and vehicle expenses incurred during the move. You can use either the simplified or detailed method to calculate these expenses.
- Temporary Living Expenses:
3. You can claim a maximum of 15 days for meals and temporary accommodation while you wait for your new home to be ready.
- Cost of Cancelling Your Lease:
4. If you had to break your lease at your previous home, you can claim the costs associated with canceling it. However, regular rental payments are not eligible.
- Incidental Costs Related to the Move:
5. Includes changing your address on legal documents, replacing your driver’s license, and similar expenses.
- Cost to Maintain Your Old Home (up to $5,000):
6. While your old home is vacant and you are trying to sell it, you can claim costs like interest, property taxes, insurance premiums, and utilities.
- Cost of Selling Your Old Home:
7. This includes advertising, legal fees, real estate commission, and any mortgage penalty for paying off early.
- Cost of Buying a New Home:
8. If you or your spouse/common-law partner sold your old home due to the move, you can claim the costs incurred for purchasing the new home. E.g. Lawyer’s fee
How to Calculate Your Expenses: Detailed vs. Simplified Methods
Detailed Method
If you choose the detailed method, you need to keep receipts for all expenses, including:
- Meal Expenses: Keep receipts for each meal purchased during the move.
- Vehicle Expenses: Record all fuel, repairs, insurance, and other costs related to using your vehicle for the move.
Tip: The CRA may ask you to provide receipts, so it’s crucial to maintain thorough records.
Simplified Method
The simplified method allows you to claim moving expenses without needing detailed receipts. Here’s how it works:
- Meal Expenses:
- You can claim a flat rate of $23 per meal, up to $69 per day, per person (for the 2023 tax year).
- Vehicle Expenses:
- Calculate your vehicle expenses using a flat rate for the number of kilometers driven during the move.
Vehicle Expense Rates Per Kilometer
You can use the following rates, based on the province or territory where your travel began:
Province/Territory | Cents/kilometer |
Alberta | 53 |
British Columbia | 56.5 |
Manitoba | 54.5 |
New Brunswick | 57.5 |
Newfoundland and Labrador | 59 |
Northwest Territories | 70.5 |
Nova Scotia | 58 |
Nunavut | 67.5 |
Ontario | 59 |
Prince Edward Island | 56 |
Quebec | 57.5 |
Saskatchewan | 52.5 |
Yukon | 70.5 |
Source: Canada Revenue Agency 2023 KM rates
Important Points to Remember
- Documentation: Keep all your supporting documents, even if you choose the simplified method, as the CRA may still ask for proof of your claim.
- Unused Expenses: If you don’t use all your eligible expenses in the current year, they can be carried forward to future years.
Need Help?
We at Tax Return Filers Ltd. are here to help you at every step of your tax filing process. Contact us, and we’d happily guide you through claiming your moving expenses or any other tax-related concerns.
With this comprehensive guide, you can confidently claim your moving expenses and reduce your overall tax liability. Remember to choose the method that best suits your situation and keep detailed records of all expenses incurred.