What is moving expense deduction?

If you move to a new location to start a job, to start a business, or for full-time post-secondary education, you may be eligible to deduct your moving expenses from income earned at the new location.

Eligibility

To claim moving expense deduction, you have to meet the following conditions:

  • You change your residence in order to earn employment income, self-employment income, or prizes and research grants in a new location in Canada.
  • You new residence is at least 40 kilometers closer than your former residence to your new location of work.
  • You cease your business or employment at the former location

Moving expenses may be deducted only from income earned in new location

Your deduction is limited to the amount of net eligible income earned in new location. Also, you cannot deduct moving expenses against non-taxable scholarship, fellowship, bursary, prize, and research grant income. If your moving expenses were greater than income earned at the new location in that year, the excess can be carried forward for deductions in the following years.

When are moving expenses deductible?

Moving expenses are deductible provided you start your new employment, business, or education in the new location within a reasonable period of time either before or after the move. For example, you were unemployed and moved to another location in Canada to look for a job. And eventually you find and begin work within a period of time. The expenses which were incurred before you have a job are eligible for deduction. Another situation is that you may intend to move to the new location but you delay the move for a period of time. You may still be eligible to claim the moving expense deduction as long as you can prove the connection between the new working location and the decision to move.

Some expenses may not be incurred until after the year of the move, for example, the expenses of selling your old home, these moving expenses may be deductible too. It should be claimed in the year you pay them.

Employer-reimbursed moving expenses

Your employer may pay or reimburse you for all or part of your moving expenses. The portion of moving expenses paid or reimbursed by your employer is not deductible unless it is included in your income.

How to claim moving expenses

Complete form T1-M, "Moving Expenses Deduction", to calculate how much you can deduct. And then claim the amount on line 219. You don't need to submit form T1-M, but keep it handy in case the Canada Revenue Agency asks to see it.

What is the first-time home buyers’ tax credit (HBTC)?

Additional information