Recently a teacher located in Ottawa won his case with the Canada Revenue Agency (CRA) to be able to deduct his moving expenses from Whitby to Ottawa for 2014. The reason that it took almost 5 years to win his case was because his mode of transportation was a canoe. See the full article here: https://www.cbc.ca/news/canada/ottawa/john-konecny-canoe-move-tax-law-canada-1.5355436
The reason that he was able to win the case was because he met the requirements to be able to claim, which include:
- Moving to work or to run a business at a “new work location”, or moving to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution
- Moving at least 40 kilometres closer to your new work location or school
Generally moving expenses are not deductible for a non-resident moving into Canada.
If you meet the requirements above, then you can claim the following moving expenses as a deduction:
- Transportation and storage costs: This applies to household items and even includes boats and trailers, and covers packing, hauling, movers, in-transit storage and insurance.
- Travel expenses: You may deduct for yourself and your household members the costs for travel including vehicle expenses, food and accommodation. For these expenses, you have the option to use the detailed method or the simplified method.
- Detailed method: The amount of the expense is the actual amount paid and you must keep your receipts for support.
- Simplified method: The amount of the meals expense is equal to $17 per meal for each person or $51 per day per person. The amount for vehicle expenses is equal to the prescribed rate by the CRA, for 2018 it was 58.50 cents/km.
- Temporary living expenses: If you must stay in temporary housing near your old or new homes, you may deduct these costs as well as meals for up to 15 days.
- Cost of cancelling the lease on your old home: This wouldn’t include any rental payments for the period during which you lived in the residence, or for any period before you cancelled your lease (regardless of whether or not you lived in the residence at the time).
- Incidental costs related to your move which include:
- changing your address on legal documents;
- replacing driving licences and non-commercial vehicle permits (not including insurance); and
- utility hook-ups and disconnections.
- Cost to maintain your old home when vacant (maximum of $5,000) after you moved, and during a period when reasonable efforts were made to sell the home. It includes the following:
- property taxes;
- insurance premiums; and
- cost of heating and utilities expenses.
- Costs of selling your old home: This applies to costs associated with selling your old house. These costs include:
- Notary or legal fees,
- Real estate commission, and;
- Mortgage penalty when the mortgage is paid off pre-maturely.
- Costs of buying your new home: This applies to costs associated with buying your new house. These costs include:
- Notary or legal fees, and
- Any taxes paid (other than GST/HST) for the transfer or registration of title to the new home.
The amount of your deduction is limited by the amount of income earned at your new place of work or from scholarships or bursaries you receive when you move to study a course as a full-time student. If the full deduction is not claimed in the year of the move, it will carry forward to the following year to be used against the income earned at the same place of work.
When you move and are eligible to claim moving expenses as a deduction, remember to keep receipts, invoices and supporting documentation for all expenses for at least 7 years. CRA will require them if you are audited.
If you have any questions relating to this matter, contact your tax professionals at Wilkinson & Co. LLP