59 Describe moving expenses and how they are treated for tax purposes.
Leonor Lanon and Kayleigh Budlong
Who can claim moving expenses in respect of an eligible relocation? ITA – 248(1)
Self-employed individual or employees and students can claim eligible moving expenses related to their relocation from one place to another within Canada.
What are the conditions to claim moving expense (an “eligible relocation”)? ITA – 248(1)
To qualify, the person’s new home must be at least 40 kilometers (by the shortest usual public route) closer to a new work location or post-secondary institution.
What are examples of eligible and non-eligible “moving expenses”? ITA – 62(3)
| Eligible Moving Expenses | Ineligible Moving Expenses |
| Travel costs (ITA – 62(3)(a)) incurred by taxpayer and household members in process of moving from old residence to new. Including:
· Meals · Lodging, and · Vehicle use Transportation and storage costs (ITA – 62(3)(b)) for household effects. Such as: · Moving van Cost of meals and lodging (ITA – 62(3)(c)) near old or new residence for taxpayer and household members. · Maximum of 15 days · Also called temporary living costs Cost of cancelling lease (ITA – 62(3)(d)) for old residence. Including: · Penalties, and · Forfeiture of deposit Costs of selling (ITA – 62(3)(e)) old residence. Including: · Advertising · Legal fees · Commissions, and · Mortgage penalties Costs of buying (ITA – 62(3)(f)) new residence. Only if the taxpayer or their spouse or common-law partner is the owner of and sold the old residence. Including: · Legal fees, and · Taxes (other than GST/HST) Costs to maintain old residence (ITA – 62(3)(g)) when vacant. Maximum of $5,000. Including: · Interest · Property taxes · Insurance · Utilities, and · Heating Incidental costs (ITA – 62(3)(h)) of moving. Including: · Changing address on legal documents · Replacing drivers’ licenses, and · Connecting or disconnecting utilities |
Costs for improvements or repairs done to make the old residence more saleable.
Any loss from the sale of the old residence.
Travel costs for house hunting trips before the move.
Travel costs for job hunting in another city.
Costs of cleaning or repairing a rented home to meet the landlord’s standards.
Costs of selling the old residence if the taxpayer delayed selling for investment purposes or until the market improved.
Incidental costs of replacing items lost or damaged in the move. |
Either the detailed or simplified method can be used to claim expenses for meals and vehicle use incurred in the process of moving.
Detailed Method – If the detailed method is used to calculate meal and vehicle expenses, the taxpayer must keep all receipts and claim the actual amount spent.
Simplified Method – If the simplified method is used to calculate meal and vehicle expenses, the taxpayer can claim a flat rate amount. To calculate vehicle expenses under the simplified method, the number of kilometers driven is multiplied by the cents/km rate for the province or territory where travel began. The vehicle rate varies by province or territory. For example, the vehicle rate for BC was $0.56 per kilometer in 2021, but the rate for Alberta was $0.51 per kilometre. As of 2021, the meal rate under the simplified method was $23/meal up to a maximum of $69/day per person.
The rates for the simplified method change each year. However, current rates – as of 2021 – can be found here.
Example – During 2021, Jack moves 950 km from Alberta to Surrey, BC with his three children for a new job. He incurs travel costs of $600 to move himself and his children to Surrey. These costs include a hotel for one night at $100 per night, meals for 4 persons over 2 full days, and gas and insurance for Jack’s car. Jack also incurs temporary living costs while he waits to move into the house in Surrey. These costs include a hotel (20 nights x $100) for $2,000 and meals (20 days x $50) for $1,000. Jack chooses to use the simplified method to calculate his meal and vehicle expenses. What is the maximum amount he can deduct for moving expenses in section 3(c)?
Travel costs:
Hotel – ($100 x 1 night) $100
Meals – ($69 x 2 days x 4 persons) $552
Vehicle – ($0.51 x 950 km) $485 $1,137
Temporary living costs:
Hotel – ($100 x 15 nights) $1,500
Meals – ($69 x 15 days x 4 persons) $4,140 $5,640
Total deduction: $6,777
The simplified method can be used to calculate meal and vehicle expenses. However, temporary living costs are limited to 15 days. Since travel began in Alberta, a rate of $0.51 per km is used to calculate Jack’s vehicle expenses for 2021.
Interactive content (Author: Leonor Lanon, March 2019)
Interactive content (Author: Mehak Sampla, June 2019)
References and Resources:
- ITA 62(1), 62(2), 62(3) – “Moving Expenses”
- ITA 248(1) – “Eligible Relocation”
- Article – “Income Tax Folio S1-F3-C4, Moving expenses” (Author: Government of Canada)
- Article – “Line 21900 – Moving expenses” (Author: Government of Canada)
- Competency map: 6.3.2
