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Moved for Work? Tax Deductible Relocation Expenses Explained


Did you know that some of the costs you incur in connection with moving for a new job in Canada are tax-deductible?

Moving at any time, for any reason, generally entails a wide range of worries, along with lifestyle changes and frequently significant financial expenditures. But can you claim your relocation expenses if you’ve recently started – or will be starting – a new job in a different location and that is the primary reason for your move? In these kind of circumstances, what can you deduct at tax time that the CRA will approve? Here, we’re going to look more closely at this issue to help ensure that tax hassles are one of the stresses of moving you don’t have to deal with alone.

Tax Deductible Moving Expenses: The Basics

You may be qualified for moving expenditures tax deductions if you are a Canadian resident who is compelled to change their residence owing to a new job or a change in employment location.

Admittedly, there are restrictions. According to the Income Tax Act, in order to qualify for these tax benefits, you must move at least 40 kilometres closer to your new place of employment or business. The sole requirement is that your new location be at least 40 kilometres closer to your new employment than your previous one. This could mean moving to a different province or staying within the same province.

Here’s an example. Your company opens a new office in Kitchener, but you currently live in Toronto. As the two are some 80-90 kilometres apart (depending on where in KW you choose to move to) moving to the Waterloo Region will make the most sense, and you should be able to take advantage of the tax deductions we’ll be discussing here as they apply to you, even though both are in Ontario and often considered reasonably close to one another.

Moving expenses tax deductions can be claimed whether you are a homeowner or a tenant—the claims are essentially the same as long as you meet the requirements. One of the mistakes that many people make is assuming that only relocating homeowners are eligible for tax breaks if they make an employment-related move. However, we’re talking about the act of moving – and all of the associated costs – not the home you’re leaving.

What Moving Expenses are Tax Deductible When Relocating For Work?

The following are examples of tax-deductible moving expenses:

  • Airfare, train/bus tickets, vehicle rentals, and personal vehicle fees. You can also include the cost of gas and, should the worst happen and your car breaks down on route, the cost of any repairs.
  • Movers or the cost of your own self-moving expenses.
  • Storage costs for household goods.
  • Expenditures of meals and lodging near the old or new residence for up to 15 days.
  • Cancellation of a lease on a rental home
  • The costs of selling your previous residence, including Realtor commissions.
  • The cost of legal expenditures, transfer taxes, and registration taxes in relation to the new residence if you are selling the old residence (excluding HST and other sales taxes which are not deductible).
  • Interest on the mortgage, property taxes, insurance, and the cost of heating and utilities for the previous dwelling, up to $5,000. The former residence cannot be rented to a tenant or occupied by you or your household members during the time that these expenses are expended. During this time, you should also be making reasonable efforts to sell the property.
  • The costs of updating basic legal documents, replacing driver’s licenses, and connecting and disconnecting utilities to your new residence.

It’s worth noting here that if your employer reimburses you for some of your moving expenses, you should keep these in mind when figuring out your deductions, as you can’t claim what someone else ultimately paid!

Tax Tips for Relocating Employees

Figuring out just which moving expenses really qualify can be tricky, and no one wants to get it wrong! Here are some tips to keep in mind.

Tax Tip #1: You don’t need receipts to deduct personal vehicle and dining costs. The cost per kilometer is determined by the region or territory from where you begin your journey. For example, you can deduct 57 cents per kilometer for driving your own car to the new location if you live in Ontario.

You can also deduct $51 per day for each household member for meals consumed during the move, up to a maximum of 15 days. Every year, the CRA adjusts the standardized meal and travel expenses. Please contact K.K. Chartered Professional Accountant for the most up-to-date rates.

Tax Tip #2: Each move is taken into account separately. Even if it happened in the same tax year as the first move, a second move back to your previous location and employer would qualify for moving expenditure tax deductions as well.

Tax Tip #3: If you’re selling your home to move to a new job, deduct the selling costs as moving expenditures rather than adding them to the home’s cost for capital gains reasons. You will get a better deduction on your income tax return if you do it this way.

Tax Tip #4: The foregoing expenses are not all-inclusive. If you suspect you have extra bills and expenses that may qualify as moving expenses, talk to your accountant.

Tax Tip #5 The Canada Revenue Agency does not allow for the reimbursement of some expenses. The following are some of these limitations:

  • Costs of renovations to make the previous home more marketable – for example, staging your home may help it sell, but the cost of doing so is not tax-deductible.
  • Losses from the previous residence’s sale.
  • Costs of job hunting and house hunting (including trips to a different city/province to look for a place to live).
  • Costs of mail forwarding
  • Mortgage default insurance

Need more help? To help ensure that you get all the tax breaks you are entitled to, while staying on the right side of the CRA, if you moved for work in the 2022 tax year let K.K. Chartered Professional Accountant help you prepare this year’s tax return to ensure you get everything right! Contact us today to get started.