Are moving expenses tax deductible in Canada?

Moving expenses are tax deductible in Canada if:

  • You’re moving to work or to study (as an employee/self-employed or a full-time student)
  • Your new home is at least 40 km closer to your new work location or school
  • The moving expenses you want to claim are eligible for deduction
  • You’ve correctly filled out the formT1-M Moving Expenses Deduction

Paying in order to move around has become a necessary expense for most homeowners in Canada. The stress of relocating with the family to a new place can be a lot and might remove the thrill of moving into a new place.  

Taking the important steps and having adequate preparation will ensure that your move is carried out efficiently. Using a moving checklist for your move will help you reduce expenses and reduce the stress involved in the move. In this article, we intend to provide answers to some significant questions that involve moving expenses and their tax deductibility. Mainly, are moving expenses tax deductible in Canada? Read on to find out!

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Claiming moving expenses on taxes in Canada: is it possible?

Claiming moving expenses on taxes is possible in some situations: like when moving for work or school. Although, this provision has its own restrictions and caveats. The important one is the new residence you’ll be moving to needs to be at least 40 km closer to your new school or workplace than the former home was. 

To be provided with answers to your moving expenses tax deduction questions right from the source, read guidelines issued by the Government of Canada on how to claim your moving expenses.

Moving expenses deduction when moving for work

Whether you are employed or self-employed, you can claim expenses for relocating as long as you’re staying in the same company. Also, you should know that moving expenses can only be claimed for the income earned in the new location. If your net moving expenses paid in the year of the move are higher than your net eligible income earned at the new workplace during the same year, you can choose to carry forward and deduct the unused part of those expenses from the income you earn at your new workplace and claim it in a future year. 

Moving expenses will most likely be paid by your employer, which is more beneficial than waiting for a tax refund. Your employer will cover the value of each dollar spent, whereas a tax refund will help you get a certain percent of the cost involved. This means that the tax return might be lower than the reimbursement you’ll get from your employer.

Note: You can make claims for moving expenses against your personal income when self-employed, but this cannot be claimed under income acquired from investments or stocks.

Moving expenses deduction when moving for school

You may claim moving expenses if you are a full-time student enrolled in a post-secondary program at a university, college or other educational institution. In Canada, the most important rule that is used in order to get a tax refund when you move for school is that the new place needs to be established as your main residence. Also, transfer the required documents and then change your address to your new location. If you keep your home address while renting a home as you study in school, it might not be possible for the move to be tax deductible. 

Bear in mind, even when you meet the eligibility standard already mentioned, not ALL the moving expenses can be tax-deductible.

What are the allowable moving expenses in Canada?

Only eligible moving expenses can be claimed on your tax return. Below is a list of the allowable moving expenses deductions:

  • Transportation related costs like hauling, moving, packing, and the insurance or the replacement value protection.
  • Costs on storage for household vehicles or goods.
  • The travel costs incurred in meals, accommodation, and the vehicle costs involved in moving the family.
  • The temporary cost of living that may be incurred, for about 15 days.
  • The cost involved in the change of legal documents.
  • The cost incurred in cancelling an old lease agreement or an old rent.
  • The cost of selling your home which includes legal fees, advertisement and the commission of a realtor.
  • The cost like notary, taxes, cost of title transfer which is incurred when purchasing a new residence.

What are the expenses that are not allowable in Canada?

Despite the fact you’ll want to claim all cost, some cost related to moving is not eligible on the tax return, such as:

  • Any of the cost which is incurred in the effort to improve the sale of your home like cosmetic repair.
  • Any loss of money involved in selling your house.
  • The cost that is incurred while looking for a new residence.
  • Job hunting expenses while in the new city.
  • The cost involved in returning the current home back to its original state.
  • Costs incurred in replacing personal items damaged or lost while moving or while at the old residence.
  • Costs incurred in forwarding mails.

How do you claim moving expenses on your tax return?

After filling out Line 21900 on the personal tax return form, you should go ahead and complete the form “T1-M Moving Expenses Deduction“. To claim your moving expenses on tax return, you’ll need to specify on this form from where you moved and where you’re going to, also provide specific details and the numbers in dollars that are involved in your move

Keep in mind that you don’t need to file the T1-M together with your return, nor do you need to file any receipts, but it is necessary you have these forms with you in case further inquiry is done by the Canada Revenue Agency.

Claiming moving expenses with & without receipts

To ensure proper account of everything in your moving budget, it is important to store all paperwork and receipts for all payments made or documents filled. Moreover, the CRA may ask to see them later. But in case you’re not used to keeping proper record of your expenses, or you don’t have the receipts or necessary documents, you might be able to claim some of the moving expenses below:

  • Expenses on meals: Flat rate of $23 for each meal, which could get to about $69 for each person for a day.
  • Expenses on vehicles: There is provision for a flat rate to get the number of km moved, using cents-per-km rate. There is a difference of this rate in the different provinces you might move into, ensure you know the table of kilometre rates on the CRA website in order to find out which of the rates are applicable to you.

Even if you have the receipts of your expenses on meals and vehicles, these various options for the claim may be more beneficial. Try to calculate both ways you can use to claim your move, in order to get a bigger benefit.

Conclusion

You now have an idea on certain things that are tax deductible even as you move, and you now know what situation you can receive back your money. You can make use of our money-saving tips as well as other information provided when you plan your next move. You have the option to decide how much is being spent and on what service. Read this article to learn more about the cost of moving!

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