Are moving expenses tax deductible in Canada?

Moving usually comes with many stressors. You have to face numerous lifestyle changes and adapt to a new environment. In addition, you have to cover moving costs. And, depending on size and distance, moving can be rather expensive. So, you might be wondering about ways to get reimbursed, at least for some of the expenses. If you are one of those asking – Are moving expenses tax deductible in Canada, we have good news for you. They are. However, before you give a call to Apollo Moving, let us help you understand which costs are deductible. And, let’s discuss the provisions of the federal Income Tax Act related to this topic.

Are moving expenses tax deductible in Canada? – A rundown

Luckily for those who are moving, moving expenses are tax deductible in Canada. Also, tax-deductible moving expenses are a good way to reduce your taxable income. Or, to receive a tax refund. However, not all moving expenses are deductible in Canada. So, before you file a tax return claim, check if you are eligible.

The good news is that the Canada Revenue Agency allows you to include a wide range of costs under the “moving expense” and to claim the tax return for them.

Who is entitled to claim moving expenses

You can claim these expenses only if you are moving to a new place for work. Or if you are moving your company to a new location. However, you must meet the 40-kilometer rule. For example, if you are using the services of movers in Mississauga to move 30 kilometers to be closer to your new job, you will not be entitled to claim the moving expenses.

If you are a full-time student or attending postgraduate studies, you are entitled to compensation for moving costs. Of course, the 40-kilometer rule applies in this case as well.

Tax-deductible moving expenses in Canada

To help you with this question, we have compiled a list of tax-deductible moving expenses. By following it, you will not fail to claim the reimbursement of expenses to which you are entitled.

Transportation and storage

You will be entitled to reimburse those costs for your household belongings. This is regardless if you were using the rental track or the long distance movers Toronto were taking care of your move.

Flight moving expenses

You are entitled to claim your flight ticket cost in case you had to move to another part of the country. Also, you can reimburse the travel costs in case you were driving to your new home. In this case, you will calculate your deduction based on the distance traveled.

Deduction of living expenses

In some cases, you will need to use temporary accommodation since your home was not ready. If so, the incurred costs will be subject to a tax deduction. However, you can claim up to 15 days of such expenses.

You might need to cancel the lease on your old home

It might happen that you need to pay the lease since your lease goes past your moving date. If so, you can include this amount in your tax-deductible expenses.

Costs of maintaining your old home

You might need to maintain your old home while trying to sell it. If so, you can claim up to $5,000 for insurance, property tax, mortgage interest, and heating. However, in case you are renting your old home during this period, you won’t be entitled to claim those expenses.

Tax-deductible costs related to selling your old home

Such costs are real estate fees, legal fees, and penalties for canceling your mortgage before its maturity date.

Other moving-related deductible expenses

There are also several more moving-related expenses that are tax-deductible. Such are:

• replacing your driver’s license
• disconnecting utilities at your old home
• connecting utility services at your new home

Is the full amount of moving expenses tax-deductible?

There are certain limits that must be respected. We’ve already discussed the 40-kilometers rule. However, there are more cases in which you can’t claim the full amount of moving-related costs. For example, your employer could already give you the provided moving allowance. And, you have used it to cover the costs of hiring long distance moving companies in Mississauga. So, you will need to leave out this part of the cost from your claim.

Besides, keep in mind that the CRA (Canada Revenue Agency) is occasionally making the audit. So, if they ask, you will have to submit all bills to prove your claim.

Is claiming moving expenses worthwhile?

Absolutely yes! You will be able to use the moving expenses deduction to reduce the taxable part of your income. So, don’t miss the opportunity. You will be entitled to a deduction in case you are moving:

• due to a new job
• following your company to a new location
• moving due to full-time studying
• or in case you are relocating your company

So, make sure to keep all the documents and bills related to your moving activity.

Are senior citizens entitled to claim moving expenses?

Unfortunately not. The Law clearly states that only those who are moving for work or full-time study are entitled. And even them only if they meet the 40-kilometer rule. As senior citizens do not belong to any of the mentioned categories, they can’t claim moving expenses. But, they can find movers Toronto ON has, and discuss the most favorable period for relocation.

What documents do you need to feel out for moving expenses tax deduction?

We have already found our answers to the question – Are moving expenses tax deductible in Canada? However, you will have to fill in and submit the requested documents. Failing to do so, you might lose the right to deduct the moving expenses. So, for your expenses, CRA requires you to fill in line 21900 – Moving Expenses. Besides, you will have to fill out the form T1-M Moving Expenses Deduction. When filling out those forms, you won’t be asked to provide the receipts for your expenses. But, make sure to keep them in a safe place, as the  Canada Revenue Agency (CRA) can carry out the audit. In such a case, they might ask to see your documentation.

References:

https://www.taxtips.ca/filing/moving-expenses-deduction.htm

https://www.osler.com/en/resources/business-in-canada/browse-topics/additional/canada-s-tax-system

https://virtusgroup.ca/virtus-insights/tax-advice/which-moving-related-expenses-can-be-a-tax-deduction/