A little-known fact in Canada is that many moving expenses are actually tax-deductible and can boost your yearly return. In this post, liv.rent will walk you through which moving expenses you can claim a deduction for, how the process works in Canada, as well as some tips and resources to help you get the most out of your tax return.
Table of Contents
What moving expenses can I claim?
There are a variety of tax-deductible expenses associated with different stages of the moving process. These can essentially be grouped into three broad categories:
- Transportation and storage expenses
- Costs associated with packing, storing and moving your things (e.g. movers, moving van/vehicle expenses, meals, storage, insurance, box rental etc.)
- Temporary living expenses (up to a maximum of 15 days)
- This also includes any costs associated with cancelling the lease on your old residence (maximum of $5,000)
- Incidental costs
- Costs related to the move (e.g. fees for utility disconnection and hook up, mail forwarding, changing your address on documents like a passport or driver’s license)
Who can claim these moving expenses?
There are a few stipulations that must be met in order to be eligible to claim tax deductions on your moving expenses. Most importantly, you must be employed or self-employed and require the move in order to continue employment, start a new job, or open/relocate your business – or, you’re a student relocating in order to attend a post secondary institution.
Here is the exact criteria, per the Canada Revenue Agency’s guidelines:
- You are an employee or a self-employed individual who moved from outside Canada to a new work location in Canada, from Canada to a new work location outside Canada, or between two locations outside Canada
- You are a deemed or factual resident of Canada, and the move was from one place where you ordinarily resided to live in another place where you will ordinarily reside
- You moved during the year and established a new home to start a new job or a business
- You earned employment income or self-employed income at your new location
- Your new home that you established is at least 40 kilometres closer to your new place of work or business than your previous home was
How Do I Claim My Moving Expenses?
In order to claim moving expenses on your tax filing, there are a few steps you’ll need to follow, and two different methods for reporting costs. These are broken down as follows:
|Detailed Method: You must keep all receipts in order to claim the actual, full amount you spent. |
Simplified Method: Meals can be claimed at a flat rate of $17/meal to a maximum of $51/day. Vehicle expenses can claim 53 cents/kilometre. While you do not need to keep detailed receipts for your expenses, the CRA may still request for documentation to support your claim.
To claim any of these moving expenses, you will have to complete form T1-M, “Moving Expenses Deduction.” On this form, you’ll need to report:
- Where you moved to/from
- Why you moved
- Specific details and dollar amounts of your moving expenses
You don’t have to submit any supporting documentation when you file, but be sure to keep it in case you are audited or if the CRA has any questions.
What else do I need to know?
The eligible moving expenses may be deducted only from your employment or self-employment income earned at the new location. If your current year’s eligible moving expenses exceeded your current year’s income at the new location, the excess can be carried forward for deduction on the next year’s tax return. And, of course, if your moving expenses were paid by your employer, you cannot deduct them.
If however, your employer gave you a moving allowance, you must include this in your income and then make sure you claim all eligible moving expenses.
Frequently Asked Questions: Claiming tax deductions on moving expenses
Can I claim moving expenses without receipts?
Yes! Certain moving expenses like meals and travel expenses can be claimed at a flat rate using the Simplified Method. While receipts aren’t necessary, it’s a good idea to hold on to some form of documentation that establishes that you did in fact move.
When can you claim moving expenses in Canada?
You can claim any moving expenses incurred during the year on that year’s tax filing. If you don’t use the full amount that year, you’re actually able to carry over the unused portion to deduct from the following year’s employment or self-employment income.
What moving expenses are NOT tax-deductible?
Any expenses paid for by your employer that are not a taxable benefit cannot be deducted. As well, though some costs associated with selling your existing home (e.g. legal/agent fees) are tax-deductible, money spent renovating or improving the house for sale is not.
Can two people from the same household claim moving expenses?
Since these tax deductions only apply to those moving at least 40km closer to a new job or post-secondary school, both individuals would have to meet these criteria in order to claim these expenses.
For additional details on how to claim tax deductions on your moving expenses, reference the Canada Revenue Agency’s website here.
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