“please consult your TSG representative if you have a ‘moving experience’ to discuss.”
We are often asked if expenses to move outside of Canada for work or study are tax deductible. The answer, in most cases, is “yes”, if the person maintains Canadian resident status.
The general rule provides that, among other conditions, a taxpayer can claim moving expenses if he/she moves at least 40 kilometers closer to a new business or employment location in Canada. Hidden deeper within the legislation were provisions that seemed to allow deductions if a taxpayer moved outside of Canada but was still a Canadian resident: Paragraph 19 of IT 178R3 confirms this conclusion. A recent proposed amendment to the Income Tax Act makes this conclusion clearer.
Examples of Canadians who leave Canada but still remain tax resident include:
- Members of the Canadian armed forces;
- Canadian ambassadors to other countries;
- Missionaries;
- Other government employees relocated abroad for work;
- Canadian students attending foreign universities; and
- Persons who leave Canada that are still Canadian tax residents based on Canadian tax rules and any applicable “tax treaties”.
The CRA website has a list of eligible moving expenses. Examples include:
- Selling costs or the cost of cancelling the lease on your residence;
- Legal and other costs for purchasing on renting your new residence;
- Transportation and packing costs;
- Cost to the taxpayer of storing household effects in the course of moving from the old to the new residence; and
- Cost to the taxpayer of meals and lodging near the old or new residence for a period not exceeding 15 days.
There are limitations on the amount of expenses you can deduct in various scenarios so please consult your TSG representative if you have a “moving experience” to discuss.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.
The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.
