Eligible Moving Expense Deductions

So very often people we meet with do not fully take advantage of eligible tax deductions and credits when they incur moving expenses related to a change in their employment.

This is Tragic.

Income tax is by far the largest expense that Canadians have and often receives the least amount of attention.

If you are moving because of changes to your employment you very likely will qualify to claim amounts that you have paid to move yourself, your family and household.

 

List of Eligible Moving Expenses:

  1. Transportation & Storage Costs

Packing, hauling, movers, in-transit storage, and insurance. This even includes non-household items such as boats, trailers etc.

 

  1. Travel Expenses:

All vehicle expenses, meals, accommodation, paid in order to move you and your members of your household to a new residence.

 

  1. Temporary living expenses:

For a maximum of 15 days all meals and temporary accommodation near the old and new residence for yourself and the members of your household qualify.

 

  1. Cost of cancelling a lease:

This includes lease obligation for your old residence, except any rental payments for the period during which you have occupied the residence.

 

  1. Other Incidental Costs:
  • Changing your address on legal documentation
  • Replacing driving licenses and non-commercial vehicle permits (this does not include insurance)
  • Utility hook ups and disconnections
  1. Cost of Maintaining your old residence:

Up to a maximum of $5,000

When it was vacant after you moved, and during a period when reasonable efforts were made to sell your home. The following are included:

  • Interest
  • Property taxes
  • Insurance premiums
  • Cost of heating and utilities expenses

***It is important to note that the costs must have been incurred when your old residence was not ordinarily occupied by you or any other person who ordinarily resided with you just before your recent move. You cannot deduct these costs during a period when the old residence was rented.

 

  1. Cost of selling your old residence:

Including advertising, notary or legal fees, real estate commissions, and even possible mortgage penalties that may be applicable before maturity.

 

  1. Cost of purchasing your new residence:

Any taxes paid other than GST/PST/HST or property taxes. It also includes legal or notary fees for purchasing the new home.

 

How to Calculate your Expenses and Deductions

There are two different methods available for calculating these expenses:

 

Detailed Method

Using this method you are required to keep all of your receipts and claim the actual exact amount you spent on each item. Vehicle expenses must include all detailed records for each expense paid.

 

Simplified Method

This allows a “Flat Rate” per individual that qualifies from your household. You do not require to keep detailed receipts however, you may be asked to provide some supporting documentation for your claim. Vehicle expenses under this method you would multiply the number of kilometers by the cents/km rate for the province or territory in which your travel began. An accurate account of all kilometers driven during the tax year for trips related to your move may be required to support your claim.

CRA provide the following forms to assist with accurately calculating the respective deductions:

 

 

It is very common to incur significant expense for moving for a change in employment. Although often unavoidable, the very least that needs to be done to properly apply the for tax relief that CRA allows to help mitigate the effect of these costs.

 

For example……$20,000 of moving expenses (which often is a drop in the bucket when all things are considered such as real estate commissions, travel, etc.) can provide up to an additional $8,800 of tax relief. This most certainly would help off-set the effect of such expenses and make the move much more enjoyable 😀

It merely takes a little planning and awareness on your part.

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