How to Claim Moving and Relocation Expenses on Your Canadian Tax Return
Mark Virgil Lofranco • 14 September 2024
If you’re one of the many Canadians who move each year for work, education, or to start a business, there’s a silver lining at tax time: you may be able to deduct moving expenses on your personal income tax return. This can offer significant savings, so it’s worth exploring if you qualify and which expenses you can claim.
Who Can Claim Moving Expenses?
To claim moving expenses, you must meet certain eligibility criteria:
- Moving for Employment or Business: If you moved to be closer to a new job or to start or run a business, you may be eligible to deduct moving expenses. The key condition is that your new home must be at least 40 kilometers closer to your new workplace than your previous residence.
- Full-Time Students: If you’re a full-time student and have moved to attend post-secondary education, you can also claim eligible moving expenses. This applies whether you moved within Canada or internationally, provided that you are considered a deemed or factual resident of Canada and report part of your scholarships, fellowships, or grants as income. You must also have taxable income following the move, such as scholarships or employment income, to claim the deduction.
- Insufficient Income in the Year of the Move: If your income in the year of the move is too low to deduct your expenses, the deduction can be carried forward to future years when you have sufficient income.
Eligible Moving Expenses
The Canada Revenue Agency (CRA) allows several types of moving expenses to be deducted, including:
- Transportation and storage costs: Includes the cost of movers, packing, in-transit storage, and insurance.
- Travel expenses: Vehicle costs, meals, and accommodations for you and your family while moving to the new location. For vehicle and meal expenses, you can choose between the detailed method (keeping all receipts) or the simplified method (using flat rates).
- Temporary living expenses: Up to 15 days of temporary accommodations and meals for you and your family.
- Lease cancellation costs: Fees for canceling a lease on your old residence.
- Vacant property costs: If your old home was vacant after the move, you can deduct up to $5,000 in expenses related to maintaining the property.
- Incidental expenses: Costs for things like changing your address on documents, replacing licenses, and utility disconnections or hookups.
- Selling costs: Legal fees, real estate commissions, advertising costs, and mortgage penalties related to selling your previous home.
Ineligible Moving Expenses
Some expenses, however, are not eligible for deduction:
- Employer-covered moving costs that are not reported as a taxable benefit.
- Home staging costs or any expenses incurred to make your old home more attractive to buyers.
- Losses on the sale of your previous home.
For a full list of ineligible expenses, the CRA provides detailed guidelines.
How to Claim Moving Expenses on Your Tax Return
To claim moving expenses:
- Use Form T1-M: Calculate your deductible moving expenses using the T1-M Moving Expenses Deduction form.
- Report on Line 21900: Enter the total on line 21900 of your T1 personal income tax return.
- Keep receipts: You don’t need to submit Form T1-M or receipts with your tax return, but be sure to keep all documents in case the CRA requests them.
By understanding and properly claiming moving expenses, you can reduce your tax burden and keep more money in your pocket during a significant life transition.
Key Takeaways
- Moving for a new job, business, or full-time studies may make you eligible to deduct certain moving expenses.
- Your new residence must be at least 40 kilometers closer to your new workplace or school.
- Ineligible expenses include losses on the sale of your prior home or employer-covered moving costs.
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