Relocation and Moving Expenses Back

Revenue Canada in some cases allows the deduction from total income of the expenses incurring in moving to a different location for the purpose of starting a new job or moving to school. You may deduct your expenses if ALL of the following are true:

You moved to start a job or a business, or you moved to attend full-time post-secondary courses at a university, college or other educational institution.

Your new home is at least 40 kilometres closer to your new work place or school than your previous home. Use the "shortest normal route" available to the public to calculate distance.

The move was from one place in Canada to another place in Canada. However, if you were a "factual resident" or a student who lives outside Canada, you may possibly qualify as explained later.

You can only deduct expenses from income or scholarship earned at the new work/school location, not from employment insurance benefits or investment income.

In calculating your deduction, you must subtract any moving grant, allowance or reimbursement you received from your employer or a government department (such as Human Resources Development) from your eligible moving expenses.

You must keep receipts in case CRA asks to see them later. The receipts are not filed, but must be retained by the taxpayer.

Eligible Moving Expenses

You can deduct reasonable amounts that you paid for moving yourself, your family and your household effects. Not all members of your household have to travel together or at the same time.

Eligible moving expenses include:

Travelling expenses from old residence to new residence (automobile expenses, meals, and accommodation).

Transportation and storage costs for household effects (packing, hauling, in transit storage and insurance).

Maximum of 15 days' living expenses near new or old residence (hotels, meals). A recent tax court interpretation held that the taxpayer could use any 15 days, not necessarily the first 15. If, for example, the employer paid the first 10 days' accommodation at the new location, then the taxpayer can still claim days 11 through 26 if temporary accommodation was still required.

Cost of cancelling the lease for the old residence.

Cost of selling the old residence (advertising, notarial or legal fees, real estate commissions and mortgage penalty when the mortgage is paid off before maturity.

Cost of purchasing a new residence (legal fees, taxes paid for the transfer or registration of title) NOTE: You can only claim these costs if you or your spouse are selling or have sold your old residence.

Moving expenses include mortgage interest, property taxes, insurance premiums and the costs associated with maintaining heat and power, in a vacant old residence. The allowable deduction is claimed on line 9 of form T1-M "Claim for Moving Expenses" and is equal to the least of the following amounts:

The actual amount of maintenance expenses or $5000

You can also deduct the cost of revising legal documents to reflect the address change, replacing a drivers license or automobile permit and utility hookups and disconnections. Enter the sum of these amounts on line 8 of form T1-M "Claim for Moving Expenses".

Employees Relocating

Compensation received by the employee for the loss in the sale of the their former residence will now be partially taxed. The taxable amount is one-half of the amount in excess of $15,000 paid.

An employee is required to include in income any compensation provided directly or indirectly in the year by an employer for reimbursement of the financing of their new residence assuming the loan would not have been made, had the employee not moved.

Where an employer provides an interest free or low interest housing loan to an employee, the provisions of the Income Tax Act will determine the value of the taxable benefit of the loan to be included in income. This will apply for loans made after Feb, 23, 1998. The benefits in respect of home relocation loans of up to $25,000 will still apply.

You may have additional moving expenses beyond those you incur by the time you file your 2012 tax return. The most common example of this is when you are unable to sell your former home right away.

If you moved in 2012 but have not yet sold your house, claim your eligible moving expenses up to the end of the year on your 2012 return. Once you sell your house, you may ask CRA to amend your 2012 return to include more expenses. You should send a letter explaining the change and attach an amended copy of Form T1-M. Send in your receipts and explain the delay in selling the property.

Students

Students may also be able to claim moving expenses if you:

move to attend university, college or other post-secondary educational institution, or leave or come to Canada to begin attending a post-secondary educational institution full-time.

As a student you can only deduct expenses up to the amount that you have included on your return as award income such as fellowships, bursaries, scholarships and research grants. Also, the move had to have brought you at least 40 kilometres closer to your educational institution.

If you are a student who moved to start a job, including a summer job, or to start a business, you can claim moving expenses as already explained.

You may be enrolled in a co-operative program which requires you to attend school for an academic session and then work for a similar period. You may deduct eligible moving expenses from income earned at your new work location. When you return to school, you may only claim moving expenses against your award income as explained above.

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