Moving expenses

Most legal expenses are personal in nature and are not deductible. However, legal costs paid to collect or establish a right to salary or wages from your employer or former employer are deductible. In addition, legal expenses paid to collect or establish a right to a retiring allowance or pension benefit are also deductible within a seven-year carry-forward period. The deduction is limited to the amount of retiring allowance or pension benefits received, less any portion that has been transferred to an RPP or RRSP.

Costs you can claim

Eligible moving expenses include travelling expenses incurred in connection with the move and the cost of transporting your household goods. The cost of meals and temporary accommodation for a period not exceeding 15 days is eligible, as are the costs of selling your old residence or, if you were renting, of breaking your lease. Any loss incurred on the sale of your former residence cannot be deducted.

You can also claim mortgage interest, property taxes, insurance premiums and costs associated with maintaining heat and power payable with respect to a vacant former residence (to a maximum of $5,000). However, you must be able to show that you were making a reasonable effort to sell the former residence. The costs of revising legal documents to reflect the taxpayer’s new address, replacing driver’s licences and automobile permits and having utilities connected and/or disconnected are also eligible for deduction.

If your employer paid for your moving expenses, you may not claim them as a deduction. If your employer pays or reimburses you for part of your moving expenses, you may deduct all of your eligible moving expenses but must report the amounts paid by your employer as income. Eligible expenses are deductible only from employment or business income earned at the new location. Amounts not deducted in the year of the move may be carried forward to another year to the extent of the employment or business income earned in that year.

Tax tip: If you’re moving to a new work location, any relocation payments should generally be structured as a reimbursement of actual expenses incurred. Payments received as a blanket lump-sum allowance, rather than a reimbursement of costs already incurred, may leave you open to tax implications. Talk to your tax adviser about how the payments can be structured to avoid or minimize tax.

Other amounts received from your employer

The rules provide that all subsidies paid directly or indirectly by an employer with respect to the financing of an employee’s new or former residence are taxable. Half of any amount in excess of $15,000 paid directly or indirectly to an employee by an employer to compensate for a loss on the disposition of the former residence is also taxable.

Student eligibility

Students may claim moving expenses if they move to begin a job (including summer employment) or to start a business. If the move is to attend a full-time post-secondary institution, the expenses can be deducted, but only to the extent of the student’s scholarship or research grant income included in the student’s taxable income for the year (but see topic 78, which comments on the taxation of scholarship and bursary income).

Optional method for claiming certain moving expenses

If you’re entitled to claim moving expenses, rather than keeping track of the detailed expenses with respect to the move, you have the option of using a simplified method for claiming your meal and vehicle expenses.

The optional rules are as follows:

  • Meal expenses: A flat rate of $17 a meal, to a maximum of $51 per day per person without receipts.
  • Vehicle expenses: This method involves the use of various pre-established flat rates. If you choose this option, you do not need to keep receipts. Instead, you simply keep track of the number of km you drove during the tax year for your trips relating to the move. To determine the amount you can claim, multiply the number of km by the cents-per-km rate that applies for the province or territory from which the travel begins. These rates can be found on the CRA’s Web site.