Moving expenses

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If you are moving and are the owner of your own business you should consider deducting the expenses in your company rather than on your personal tax return.

If you do not have that option, then the tax rules provide that if you have moved to be at least 40 km closer to your place of work then most moving costs will be deductible from employment or business income earned at the new location.

The list of expenses that may be deducted is long, but not all moving related costs are deductible. Under the Canada Revenue Agency’s Form T1-M, Moving Expenses Deduction the following are considered eligible moving expenses:

  • Traveling expenses, including vehicle expenses, meals, and accommodation, to move the taxpayer and members of his or her family to their new residence(note that not all members of the household have to travel together or at the same time);
  • Transportation and storage costs(such as packing ,hauling, in-transit storage, and insurance) for household effects, including items such as boats and trailers:
  • Costs for up to 15 days for meals and temporary accommodation near either the old or the new residence for the members of the household:
  • Lease-cancelation charges(but not rent) on the old residence;
  • Legal fees incurred for the purchase of the new residence, together with any taxes paid for the transfer or registration of the title to the new residence;
  • The cost of selling the old residence, including advertising, legal fees, real estate commissions, and any early payout mortgage penalties;
  • The cost of changing an address on legal documents, replacing driving licenses and non-commercial vehicle permits (except insurance), and utility hook-ups and disconnections.

It sometimes happens that a move to the new home has to take place before the old residence is sold. In such circumstances. the taxpayer is entitled to deduct up to $5,000 in costs incurred related to the maintenance of that residence while it is vacant and efforts are being made to sell it. Specifically, costs including interest, property taxes, insurance premiums, and heat and utility expenses paid in relation to that residence may be deducted.

Some of the expenses that are not deductible are:

  • Expenses for work done to make the old residence more saleable (i.e., home-staging costs, furniture or art rental charges, cleaning costs, etc.)
  • Any loss incurred on the sale of the old residence;
  • Expenses incurred to clean or repair a rental residence to meet the landlords standards;
  • Costs to replace such personal-use items as drapery and carpets; and
  • Mail-forwarding costs.

In order to claim a deduction receipts must be kept and provided to CRA if requested.

Any moving-related expenses can be deducted from either employment or self-employment income (but not investment income or employment insurance benefits) earned at the new location. Where a move takes place and the expenses exceed income earned at the new location during the calendar year, it’s possible to carry forward the excess expenses and deduct them from income earned in subsequent years.

For more detailed information please call KWB at 780-466-6204 or email us by clicking here.

Thanks to David Wickenberg of KWB Chartered Accountants for providing this content.

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