Moving Expenses: Eligibility, Deductions, and How to Maximize Your Benefits
- Rylan Kaliel
- 3 days ago
- 13 min read
Relocating for employment, education, or business purposes can involve significant costs. Fortunately, the Canada Revenue Agency (CRA) allows eligible individuals to deduct certain moving expenses, easing the financial burden of relocation. This blog will clearly outline who can claim these expenses, which costs qualify for deductions, documentation requirements, and how to maximize your deductions effectively.
Who Can Claim Moving Expenses?
You may be eligible to deduct moving expenses if you moved to (referred to as “new work location”):
Carry on a business;
Relocate to be employed at a location; or
Attend a post-secondary institution full-time.
The move must also satisfy two key conditions:
Your old home must be at least 40 kilometers closer (by the shortest public route) to your new place of employment or study than your previous home would have been.
You must have moved from one residence to another within Canada (some exceptions may apply, see Moved from One Residence to Another in Canada below).
Let’s break down all these conditions below to get a more in-depth look at what they mean.
New Work Location
New work location is a bit misleading in the context of moving expenses, it technically does not mean that the work, or school, location must be new, instead it requires that one of the above conditions be met (carry on a business, be employed, attend a post-secondary institute). Given this, there can be significant confusion as to what is a new work location.
Ideally, a move would take place for one to start a new job, carry on a new business, or attend school, but some situations that could arise that may be considered a new work location could be:
Transfer to a new office: A mechanic transfers from the shop in Kelowna to the shop in Calgary.
New office: An administrative assistant is now required to report to work at a new office.
Summer job: A student moves back home for the summer to take up employment over the summer.
Working from home: A web designer no longer has an office available to them and is required to work from home, which requires them to move to a home that has appropriate office space. This can be tricky and may require additional justification as to why it was required and to assist in the distance requirements. See Distance Requirement and Purpose of Move below.
Promotion/Different department: A nurse changes departments at a hospital. This one can be tricky, as there may need to be justification as to why the move was required, such as different hours that don’t line up with public transit, more hours, etc. More on this in Purpose of Move below.
Moved years after new work location undertaken: A student has been attending university for 2 years and now has decided to move as the commute became too much. Like the above, this can be tricky as there needs to be additional support to justify why a move was required.
As can be seen above, this doesn’t require that this be “new” but could include multiple different reasons for the move. It is generally ideal if it is “new”, as it is much easier to support the claim and, as we will see below, the purpose, however, there are several situations that a new work location could arise.
In addition to this, it is important to note that a new work location need not be one specific job. As will be discussed later in Limitation on Deduction and Carryforward, the deduction is limited to the income of the new work location. A new work location refers to a location, not a specific job. If a person took up employment at one company, say Company A in Red Deer and then switched to a new job with Company B, also in Red Deer, both Company A and Company B would typically be a new work location.
Purpose of Move
Generally speaking, the move must have a purpose. One of the conditions to claim moving expenses is that they must have enabled you to carry on activities at a new work location. It is the word “enabled” that would infer that there must be a purpose.
The CRA notes that there must be a connection between the move and the new work location. This connection is determined on a case-by-case basis. The CRA does explicitly note that this connection is not met where one moves for solely personal reasons. That said, a connection can exist for employed or self-employed persons in the following situations:
Employee moves due to a transfer to another establishment; or
Self-employed individual moves for business reasons, such as needing to be closer to their market or the resources needed for their business.
For the self-employed individual, take an example of a realtor. The realtor operates largely out of southern Calgary but recently most of their work has been in Airdrie. Given this, the realtor decides it makes more sense for them to move to Airdrie to be closer to their market. In these situations, provided the 40-kilometre requirement is met (discussed more in Distance Requirement), there is a strong argument that the moving expenses can be deductible.
It is important to document what the purpose of the move was at the time that the move arose. Ensuring that the purpose is documented and that support is retained showing this purpose can greatly increase the chances of deductibility of these expenses.
Ordinarily Resided
Ordinarily resided generally means that this is the place is where one would carry out the normal routine of their life. This could mean that this is the place where you have your family, you park your car, you sleep, eat, and relax for the day.
It is important to note that this does not necessarily have a time limit, such that you need to reside for more than a year, etc., but simply intends that you carry out the normal routine of your life at this location. There can be difficulties justifying this if the routine is short and known to be short, such as a temporary stay at a camp up north for a month but could be justifiable in longer stays under the same situation, such as a stay for a year.
Moved from One Residence to Another in Canada
While the condition does note that the residences be in Canada, there is an exception. This can still be met if you are absent from Canada, but you maintain residency within Canada. The concept of residency is far beyond the scope of this blog but would typically mean that you continue to be taxed and file a tax return in Canada.
It is strongly recommended that if you intend to be absent from Canada you discuss your situation with a tax professional as the rules can be extremely complex.
Distance Requirement
The 40-kilometre distance requirement is generally the distance between your new home and the new work location less the distance between your old home and the new work location. Let’s do a quick example to illustrate this:
Angela took up a new work location in downtown Calgary.
Angela previously resided in Red Deer and the distance between their old home and the new work location is 152 kilometres.
Angela moved to their new home in Calgary and the distance between their new home and new work location is 11 kilometres.
Based on the above, we would expect the following calculations:
In this case, Angela should meet the distance requirement.
There are a couple of things to note about calculating the distance:
The distance is calculated using road distance, not the distance of a straight-line, or “as the crow flies”.
This road distance is calculated using the shortest reasonable distance, not necessarily as would be calculated using a mapping software, such as Google Maps.
The shortest reasonable distance would generally be the most ideal route, such as a main highway, but may not include certain routes such as where it is difficult or challenging to achieve, such as an extremely windy road, routes that have tunnels that moving trucks may not be able to pass, or others.
Prior to considering whether you can claim moving expenses, this distance should be calculated and confirmed it is above the 40-kilometre threshold.
Eligible Relocation for Students
For eligible relocations for students, the move generally must occur to allow the student to be in full-time attendance and enrolled in a program at a location of a university, college, or other educational institution. To be considered full-time, the student must satisfy the full-time enrolment requirements for the purposes of receiving the education tax credit.
While these credits no longer exist, the conditions for moving expenses remain. A full-blown analysis of what a “full-time student” is would be out of the scope of this blog, however, generally, a student who is in regular attendance in an educational program may be considered to be enrolled full-time.
Qualifying Moving Expenses
Eligible moving expenses include:
Transportation and storage costs: Movers, vehicle rentals, and shipping expenses.
Travel Costs: Meals, accommodation, and transportation for you and your household members during the move.
Temporary Living Expenses: Up to a maximum of 15 days for meals and accommodations near either your old or new home.
Costs of Cancelling a Lease: Penalties and administrative fees charged by the landlord for cancelling the lease agreement and forfeiture of the last month’s deposit.
Selling Costs of Old Home: Real estate commissions, legal fees, advertising, and other related costs.
Purchase Costs of New Home: Legal fees, transfer taxes (excluding GST/HST and sales tax).
Interest, Property Taxes, Insurance, Heating/Utilities of Old Home: Up to $5,000 for those expenses incurred while reasonable efforts were made to sell the old home.
Costs of Changing Legal Documents: Changing legal documents to reflect new address, replacing drivers’ licenses and non-commercial vehicle permits.
See below for a more detailed look into certain costs and what might be included in them, along with details on how they may be calculated.
Travel Costs
Travel costs generally would include costs related to the distance travelled, meals, and accommodations, such as hotels, for the travel. Starting with accommodations, these would generally be deductible based on the amounts you paid.
With respect to meal and distance travelled, there are two options: detailed and simplified.
Detailed: The detailed method allows you to claim the actual amount you spent. You should keep receipts in case the CRA asks to see them and, especially for the distance travelled, additional support would be required to support this claim.
Simplified: The simplified method allows you to claim a per diem, or fixed amount, for each meal/kilometre travelled. You should still retain a copy of the receipts to support your claim.
With respect to these methods, the detailed method tends to be the most straightforward, especially for meals, you simply retain your receipts, and you can deduct these amounts. With respect to the distance travelled, there are more nuances, such as requiring a travel log and detailed receipts, which will be discussed in our upcoming blog on Travel Expenses.
For the simplified method, these are based on a fixed amount available depending on several factors. Starting with meals, this fixed amount is, at the time of writing, $23 per meal, per person, up to a maximum of $69 per day, per person. If you travelled for two days and there were two persons your claim would be $276.
For distance travelled, this is dependent on the province you are travelling in. Assuming we are in Alberta, the rate at the time of writing is $0.545 per kilometre. So, if we travelled for 108 kilometres, the deduction would be $58.86 under this method. It is important that you track the specific kilometres travelled and document this to support your claim.
For up-to-date rates and information, see the CRA’s article on this for more details.
Selling Costs of Old Home
Generally, when you sell property, these costs would be deducted against the sales proceeds of that property. We would expect that the sale of a home would be a capital gain, which, as noted in our blog on capital gains, only half of the net gain would be included into income, so you only get half of the deduction for these costs. Further, if the home is your principal residence, their may be reduced or no tax payable on this sale, which means that this reduction to the sales proceeds may not benefit you.
When considering these costs as part of a move, you are allowed to either deduct these against the sales proceed of the home or as a moving expense deduction. The moving expense deduction will generally give you a 100% deduction, rather than the 50% if it were treated as a capital gain. This makes it more favourable to deduct these as moving expenses in most cases.
Selling costs can include real estate commission, legal or notarial fees, advertising, and more, as noted above. It would be prudent to review these expenses with a tax professional to determine the best possible deduction for your situation.
Interest, Property Taxes, Insurance, Heating/Utilities of Old Home
Certain costs of maintaining your old home while efforts are made to sell the home may be deductible. These costs are limited to $5,000 and can include interest, property taxes, insurance, heating, utilities, and others for the old home. This deduction is limited to $5,000, however, where there are multiple persons moving this deduction is limited to $5,000 for each person.
For example, if a person and their spouse move and both meet the conditions to deduct moving expenses then both the person and their spouse can deduct up to $5,000, bumping this deduction up to $10,000 for the family.
It is important to note that the home cannot be occupied by yourself or by any other person who ordinarily resided with the you before the move, nor can it be rented out to anyone during this time. Any expenses arising while it was occupied or rented would typically not be deductible as a moving expense.
Expenses You Cannot Deduct
Certain expenses are specifically excluded from deductions, including:
Home renovations or improvements intended to increase the selling price of your previous residence.
Costs associated with house hunting trips.
Mortgage penalties.
Losses from the sale of your home.
These being said, there may be some ability to still claim these deductions, including reviewing if they fit as a different type of expense for moving expenses or on another section of the tax return. Therefore, it is important to have these, and other expenses reviewed by a tax professional to confirm their deductibility.
Person Claiming the Expense
In cases where a person and their spouse both move and meet the conditions to deduct the amounts as moving expenses, the CRA currently allows flexibility in who claims the deduction. This means that you can choose whether you, your spouse, or both of you make this deduction. Where both spouses are claiming the deduction, care should be taken to ensure that any expense claimed by one person is not claimed by the other (no double-deductions). Generally, it is best to try to target the person with the higher income as this would result in the best tax savings. For a review of this, see our blog on the basics of individual taxation.
Limitation on Deduction and Carryforward
The amount that can be deducted is limited to the income from the new work location. This means that if you incurred $14,000 in moving expenses but only had $10,000 of income from the new work location, you would only be allowed to deduct $10,000. The remaining $4,000 would be carried forward to the following year and can be deducted against the income from the new work location in the following year.
As was discussed in New Work Location, new work location doesn’t refer to a specific job, business, or location of studies, but rather a location. For example, if you moved to earn income from a job that paid you $8,000 and then moved to a new job in the same location, which paid $25,000, your income for the year from your new work location would be $33,000, not the $8,000 from the job you initially moved for.
For students, income typically refers to the amount of income received from scholarships, fellowships, research grants, and certain prizes, provided they are taxable. There may also be an option to deduct moving expenses where a student has a part-time job or business during their studies, provided the part-time job or business meets the conditions to be treated as a new work location.
Let’s look at an example of this, assuming the following:
Erica incurred $15,000 of moving expenses.
Erica’s income from their new work location was $7,000 in 2024 and $53,000 in 2025.
Based on the above, we would expect the following calculations:
As we can see, in 2024 all of Erica’s income from the new work location is deductible, however, there is still $8,000 of moving expenses that are not yet deducted. These go into our moving expense carryforward and we would then use this to reduce income in 2025, as is seen above. This means that even if you do not have sufficient income in one year this deduction is not lost.
Calculating and Reporting Moving Expenses (Form T1-M)
Moving expenses are calculated and reported using Form T1-M (Moving Expenses Deduction). To claim, you must:
Include details of the kilometres between:
Your old home and new work location; and
Your new home and new work location.
Provide dates of your move and the date you started at your new work location.
Indicate the main reason for the move.
Provide the address of your old home, new home, and information about your new work location.
Detail your eligible expenses clearly, indicating, where applicable, if you want to use the detailed or simplified method.
Report your net eligible income earned from your new location.
Attach Form T1-M to your tax return or keep it available if filing electronically.
As discussed above, your deduction is limited to the net eligible income earned at your new location during the year. Excess expenses can be carried forward to offset eligible income in future years.
Documentation and Record-Keeping
CRA requires clear documentation to substantiate moving expense claims, including:
Receipts for all claimed expenses (transportation, storage, accommodations, etc.).
Documents confirming employment or education at the new location.
Mileage logs if claiming vehicle expenses.
Maintaining organized records is crucial for avoiding problems during CRA reviews or audits.
Strategic Considerations to Maximize Your Deductions
To optimize moving expense deductions:
Schedule your move strategically to align with starting a new job or academic term, ensuring eligibility.
Keep detailed and comprehensive records of all related expenses.
Clearly document distances between old and new home and work locations.
Clearly document the purpose of the move.
Common Mistakes and How to Avoid Them
Common errors include:
Claiming non-eligible expenses.
Miscalculating eligible travel or accommodation costs.
Lack of clear documentation.
To avoid these pitfalls:
Carefully review the CRA guidelines for eligible moving expenses.
Keep detailed, accurate, and organized records throughout the moving process.
Consult a tax professional if you're uncertain about your eligibility or the deductibility of certain expenses.
Summary
Claiming moving expenses can significantly reduce your taxable income and ease the financial impact of relocating for employment, business, or education purposes. Properly understanding eligibility, allowable deductions, and documentation requirements is essential to maximizing your tax benefits effectively.
Stay tuned for our next blog post, where we'll explore travel expenses. KLV Accounting is here to help. Contact us today to enhance your financial strategy and drive business success!
For a free consultation, call us at 403-679-3772 or email us at info@klvaccounting.ca.
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