Summary
If you have started a new job and you are moving to a residence that is closer to your work, you can claim moving expenses if your new home is at least 40 kilometers closer to the location of your new workplace. If your employer is generous and provides you with a moving expense and relocation benefit, it may be taxable.
- Moving expenses can only be deducted from employment income earned at your new place of work.
- If your employer reimbursed you for moving expenses but did not add them to your income, you cannot claim those expenses.
- You are not allowed to claim moving expenses against other types of income, such as capital gains or rental income.
Claiming Moving Expenses
To claim eligible moving expenses, you need to complete Form T1-M (Moving Expenses Deduction). This form calculates the moving expense deduction amount you can claim on line 21900 of your tax return.
If your employer provided you with an allowance or reimbursement for moving expenses, the Canada Revenue Agency allows you to make a claim if you include it as part of your taxable income or it is used to reduce your moving expenses by the benefit amount.
Moving Expenses You Can Deduct
Once you have determined that you qualify for moving expenses, you can make claims for reasonable moving expenses you incurred to move to your new location.
Expenses you are able to claim include:
- Your transportation and storage costs, including packing, hauling, movers, in-transit storage, and insurance for your belongings.
- Travel expenses to move you and your family to your new home. These expenses include meals and any accommodations (such as hotel rooms) you had to pay for.
- Fees for cancelling your lease at your old home (if your previous residence was rented).
Ineligible Moving Expenses
Not every expense you incur with your move is tax-deductible. If your employer reimbursed you for moving expenses and did not include them in your income, you are not allowed to claim a deduction.
You cannot claim the following expenses:
- The travel expenses you incur for work done to prepare your existing home to go on the market.
- Any losses from selling your home (if it’s sold at a lower price).
- Your travel expenses for looking for a home near your new place of work.
- Your expenses to tidy or fix up your rented home for your former landlord (if your previous residence was rented).
Carry Forward Moving Expenses
You can carry your moving expenses forward to future years if you are unable to use the full amount in the current tax year. If your net moving expenses exceed your net eligible income at your new place of work in the current tax year, you can carry forward the amount and use it to reduce taxes on future income that you earn.