Each year, many Canadians move their primary residences. Some might be able to deduct certain moving expenses on their year-end personal tax returns. Not everyone can claim the deduction, as there are criteria for eligibility and certain types of expenses that can be deducted.
Who Can Claim Moving Expenses?
Individuals who have moved and established a new home to be employed or to run a business at a new location are entitled to deduct eligible moving expenses. You must be a deemed or factual resident of Canada, and the move must go from the place where you ordinarily reside to another place where you will ordinarily reside.
You may be eligible for the deduction if the new home is at least 40 kilometres closer to your new place of work than the prior location. This covers individuals who have moved within Canada, from outside Canada to a new work location in Canada, from Canada to a new work location outside of Canada and certain individuals who moved between two locations outside of Canada. Full-time students may also qualify to deduct the eligible moving expenses from part of their scholarships, fellowships, bursaries and research grants that are required to be included in income.
What Types of Expenses Can You Claim?
You can deduct eligible moving expenses. Transportation and storage costs are common, which include all movers, in-transit storage, packing, and insurance. Travel expenses to the new location, including vehicle expenses, meals, and accommodations for you and your family members are all eligible. To claim vehicle or meal expenses, you must use either the detailed or simplified method.
Temporary living expenses (for up to a maximum of 15 days), including meals and accommodations for you and your family, can be deducted. Costs of cancelling a lease of your old residence and costs to maintain your old residence (maximum of $5,000) when it was vacant after you moved are also eligible.
Incidental costs, such as changing your address on legal documents, replacing driver licenses, vehicle permits, and utility hookups and disconnections are deductible as long as they are related to the move. If you purchased or sold property as part of the move, you can deduct those selling costs, including advertising, legal fees, real estate commission and mortgage penalties, if they’re applicable.
How Do You Claim the Expenses on Your Tax Return?
Use form T1-M, Moving Expenses Deduction to calculate all of the moving expenses that you are able to claim on line 21900 of your T1 return. You do not need to attach the T1-M form to your return, nor do you need to attach all of the receipts and documents to support the claim, but you must keep these receipts and documents on hand if the Canada Revenue Agency requests that you provide support for your claim.