Overview of Moving & Relocation Expense Deductions in Canada

Every year, a significant number of Canadians relocate their primary homes. If you’re among them and have moved to start a new job, begin a business, or pursue full-time education at a college or university, you might be in for a tax advantage. It’s possible to subtract most of your relocation expenses or costs tied to selling your previous home from your personal income tax.

Read on to learn if you qualify for this tax benefit and which expenses you can—or cannot—deduct.

Key Points to Remember

• Eligible moving expenses can be deducted if you relocated your primary residence due to a new job, business startup, or full-time education.
• Your new home must be at least 40 kilometers closer to your workplace or business site than your old one to qualify for the deduction.
• Certain moving costs, like losses from selling your old home, are not deductible.

Who is Eligible to Claim Moving Expenses?

A lot of Canadians might qualify to claim moving expenses. However, there are specific eligibility criteria, and only certain expenses are deductible. For example, if you move and set up a new home to work or conduct business in a new place, you can deduct eligible moving expenses.

To be eligible, your new residence must be at least 40 kilometers nearer to your job or business location than your previous home. This applies to moves within Canada, from abroad to Canada, from Canada abroad, or between two foreign locations. Post-move, you must earn income at your new location to deduct these expenses. If your income in the moving year isn’t sufficient, you can carry forward the deduction to the next year when your income might be higher.

Full-time students moving for their studies can also deduct eligible expenses from certain parts of their income like scholarships, fellowships, bursaries, and research grants that are taxable. According to the Canada Revenue Agency (CRA) movers into or out of Canada must be deemed or factual residents of Canada. Also, you must have enough taxable scholarship income or self-employment earnings (T4/T4A) at the new location. Like with employment-related moves, if income is insufficient in the moving year, you can carry forward the deduction.

Remember to report any earned or taxable income immediately following your move on the T1-M Form.

Deductible Moving Expenses

The CRA recognizes several deductible moving expenses. These include:

• Transportation and Storage: Costs like movers, packing, in-transit storage, and insurance.
• Travel Expenses: Costs of traveling to the new location, including vehicle expenses, meals, and accommodations for you and your family members. You can claim these using either the detailed or simplified method.
• Temporary Living Expenses: Up to 15 days of meals and accommodations for you and your family.
• Lease Cancellation and Property Maintenance: Costs of cancelling your old residence’s lease and maintaining it when vacant, up to a $5,000 limit.
• Incidental Expenses: Costs related to the move, like changing your address on legal documents, driver’s licenses, and utility hookups.
• Property Transaction Costs: Costs involved in buying or selling property as part of the move, including advertising, legal fees, real estate commissions, and mortgage penalties if applicable.

Ineligible Moving Expenses

Not all moving expenses are deductible. For example, expenses covered by your employer that aren’t taxable benefits don’t qualify. Also, costs to make your home more appealing to buyers, as well as losses from selling your home, are not deductible. The CRA provides a complete list of ineligible expenses.

How to Claim Moving Expenses

To claim your moving expenses, fill out Form T1-M, Moving Expenses Deduction, and report the deductible amount on line 21900 of your T1 tax return. While you don’t need to attach the T1-M Form or receipts to your return, keep them ready for any CRA requests.