Table of Contents
- Moving Expenses – Rules and Criteria
- Eligible Moving Expenses You Can Deduct on Your Tax Return (T1)
- Ineligible Moving Expenses That You Cannot Deduct
- Using the Simplified Method for Travel and Filling Out the T1-M Form
- 🧾 What Is the Simplified Method?
- 📄 The T1-M Moving Expenses Deduction Form
Moving Expenses – Rules and Criteria
Moving to a new city or province can be exciting, but when it comes to taxes, not every move qualifies for a deduction. In Canada, the CRA allows taxpayers to claim moving expenses only under specific circumstances. Understanding these rules is crucial, as many moves are considered personal and therefore not eligible for tax deductions.
Let’s break down the key rules and criteria for claiming moving expenses on a Canadian tax return.
1. Who Can Claim Moving Expenses
You can claim moving expenses only if your move meets both of the following conditions:
Condition 1: The purpose of the move
You must have moved for one of the following reasons:
- To start a new job or operate a business at a new location.
- To attend full-time studies at a post-secondary educational institution.
This means personal reasons—like wanting a bigger home, better neighborhood, or shorter commute—do not qualify for moving expense deductions.
Examples:
- ✅ Eligible: You moved from Ottawa to Toronto to start a new full-time job.
- ❌ Not eligible: You moved from one part of Ottawa to another just to live closer to family.
2. The 40-Kilometre Rule
After the move, your new home must be at least 40 kilometres closer to your new work location or school than your old home was.
For example:
- Your old home was 70 km away from your new job.
- Your new home is 25 km away from that same job.
- The difference is 45 km — ✅ this meets the 40-km rule.
How is the 40 km measured?
The CRA measures the distance using the shortest public route, not a straight line (“as the crow flies”). This was clarified by Canadian tax courts to ensure fairness, as real-life travel distance often differs from map distances.
If you’re unsure, you can check the route using a map or GPS to confirm the distance from your old home to your new workplace or school.
3. Limitation Based on Eligible Income
You can only claim moving expenses up to the amount of income you earned at your new location.
For example:
- You earned $5,000 at your new job before the end of the year.
- Your total moving expenses were $7,000.
- You can claim $5,000 this year and carry forward the remaining $2,000 to the next tax year to apply against future income from the same job or location.
This rule ensures that moving expenses are deducted only against the income that the move helped you earn.
4. Carrying Forward Moving Expenses
If your move happens late in the year (for example, in November or December), you might not have earned enough income at the new location to claim all your moving expenses in the same tax year.
In that case, you can carry forward the unused portion to the next year, as long as you continue to earn income from the same job, business, or school program that caused the move.
5. Reporting and Documentation
To claim moving expenses, you must complete Form T1-M – Moving Expenses Deduction.
You’ll need to keep detailed receipts and records for all eligible expenses, including transportation, temporary accommodation, and storage (these are discussed in later sections).
The CRA often reviews claims for moving expenses, so having your documentation ready is essential.
6. Why Many People Cannot Claim Moving Expenses
In practice, most moves do not qualify because:
- The move is within the same city, and the new home is not 40 km closer to work or school.
- The move is for personal reasons, not work or education.
That’s why, even for experienced tax preparers, moving expense claims are relatively uncommon — they only arise in specific, qualifying situations.
7. Summary
| Rule | Requirement |
|---|---|
| Purpose of move | Must be to start a job, business, or full-time education. |
| Distance test | New home must be at least 40 km closer to work or school. |
| Income limit | Expenses can only be deducted up to income earned at the new location. |
| Carry-forward | Unused expenses can be carried forward to the next year. |
| Form to use | T1-M Moving Expenses Deduction. |
8. Key Takeaway
Claiming moving expenses is possible only when the move is directly tied to earning income or pursuing education, and it meets the 40-kilometre rule. Always document your expenses carefully and keep receipts in case the CRA requests verification.
Eligible Moving Expenses You Can Deduct on Your Tax Return (T1)
When you move for work, business, or full-time studies and meet the CRA’s moving expense criteria (as discussed in the previous section), you may be eligible to deduct certain costs related to your move. These deductions help reduce your taxable income — but only reasonable and eligible expenses are allowed.
Let’s go through the main types of moving expenses you can claim in Canada, as outlined by the CRA.
1. Transportation and Storage Costs
These are the most straightforward expenses to claim. They include the cost of physically moving your belongings and storing them while in transit.
You can claim:
- Hiring a moving company or renting a moving truck.
- Packing, crating, unpacking, and insurance costs during the move.
- Storage fees for furniture and personal items until they arrive at your new home.
Essentially, any reasonable expense needed to move your family and household effects is considered eligible.
2. Travel Expenses During the Move
If you and your family travel to your new home, you can claim reasonable costs for:
- Vehicle expenses (gas, mileage, maintenance during the trip).
- Meals and accommodation along the way.
The CRA allows up to 15 days of meals and temporary lodging for you and your family during the move. This covers the time it reasonably takes to travel from your old residence to your new one.
💡 Important:
The CRA expects these costs to be reasonable. Staying at a moderately priced hotel or eating simple meals is fine — but claiming a week at a luxury resort or fine dining during the move would not be accepted.
3. Temporary Living Expenses (Up to 15 Days)
In some cases, you may arrive at your new city before your new home is ready. The CRA allows you to claim temporary living expenses for up to 15 days for you and your family members.
This includes:
- Hotel or rental accommodation while waiting for your new home.
- Meals during this temporary stay.
4. Costs of Selling Your Old Residence
If you owned your old home, the following expenses are deductible:
- Real estate commissions and advertising costs for selling your property.
- Legal fees associated with the sale.
- Mortgage prepayment penalties, if you had to break your mortgage early to move.
- Land transfer taxes or fees related to the sale of your old residence.
These costs often make up a large portion of total moving expenses, and the CRA recognizes them as necessary when relocating for work or school.
5. Costs of Purchasing a New Residence
Generally, you cannot deduct expenses for buying your new home, except for certain legal or registration fees related to transferring ownership or title if required as part of the move.
For example, if you needed to pay legal fees or land transfer taxes for your new residence, those may be eligible — but only if your move meets all CRA conditions.
6. Lease Cancellation Costs
If you were renting your old home, you can deduct:
- Lease cancellation fees or penalties for breaking your rental agreement early.
This ensures tenants are treated fairly compared to homeowners who can deduct real estate and legal costs when selling a property.
7. Maintaining Your Old Residence (Up to $5,000)
Sometimes, you may have to start working or studying before your old home is sold. The CRA allows you to claim certain maintenance expenses for your old home, up to a maximum of $5,000, as long as:
- You made reasonable efforts to sell the property, and
- You were not renting it to anyone else during that time.
Eligible maintenance expenses may include:
- Mortgage interest, property taxes, insurance, and utilities (such as heat and water).
💡 Example:
If you move to a new city in July for work but your old home remains unsold until September, you can claim up to $5,000 of these costs for the two months it was vacant.
8. Reasonableness Matters
The CRA uses what’s known as the “reasonableness test” when reviewing moving expenses. In other words, the expense must be realistic for the situation.
For example:
- Reasonable: 2 nights in a mid-range hotel during your cross-country move.
- Unreasonable: A week in a luxury resort on your route to the new city.
When in doubt, consider whether the expense was necessary for the move and directly related to it.
9. Documentation and Proof
To claim moving expenses, you must:
- Complete Form T1-M (Moving Expenses Deduction).
- Keep receipts, invoices, and proof of payment for all expenses.
- Be ready to provide them if the CRA requests verification.
Without documentation, your deduction could be denied.
10. Summary of Eligible Moving Expenses
| Category | Examples of Deductible Expenses |
|---|---|
| Transportation & Storage | Movers, truck rental, packing, storage, insurance |
| Travel | Vehicle costs, meals, accommodation during the move |
| Temporary Living (15 days) | Hotel, meals while waiting for new home |
| Selling Old Home | Real estate commissions, legal fees, mortgage penalties |
| Lease Cancellation | Penalties for breaking rental lease |
| Maintaining Old Residence | Up to $5,000 for mortgage interest, property taxes, utilities |
| Legal/Title Fees (New Home) | Certain legal or registration costs |
11. Final Tip
Moving expense claims can be technical and sometimes confusing. If you’re unsure about a specific cost, always refer to the CRA’s Moving Expenses guide (Form T1-M instructions) for the most up-to-date information.
Ineligible Moving Expenses That You Cannot Deduct
When Canadians move to start a new job, run a business, or attend a post-secondary institution, the Canada Revenue Agency (CRA) allows certain moving expenses to be deducted on the tax return. However, not all expenses related to moving qualify for this deduction. Many common personal or incidental costs cannot be claimed, even if they were part of your move.
This section will help you understand which moving expenses are not deductible and why the CRA excludes them. Knowing this helps you avoid mistakes and ensures your client (or you, if you’re filing your own taxes) claim only what’s allowed.
💡 Why Some Moving Expenses Are Not Deductible
The CRA distinguishes between personal and income-related costs.
Eligible moving expenses are those directly tied to earning income or attending school — such as transportation, temporary accommodation, or selling your old home.
Non-deductible expenses, on the other hand, are typically personal lifestyle costs — things that cannot be easily measured, verified, or linked to income generation. For example, there’s no fair way for the CRA to determine how much time or money a person “should” spend house-hunting or job-hunting. Because of this subjectivity, those expenses are not deductible.
🚫 Common Non-Deductible Moving Expenses
Here’s a list of expenses that cannot be claimed as moving expenses on your Canadian income tax return:
1. House-Hunting or Job-Hunting Trips
- Travel, accommodation, or meals while looking for a new home or job are not deductible.
- The CRA considers these personal choices and unrelated to the act of moving itself.
2. Repairs or Improvements to Sell Your Old Home
- Costs to clean, paint, or make repairs to your former residence before selling it are not eligible.
- These are treated as personal upkeep expenses or capital improvements, not moving expenses.
3. Loss on the Sale of a Home
- If you sold your old home for less than you paid for it, the loss is not deductible as a moving expense.
- Only the direct selling costs — like legal fees or real estate commission — may be deducted.
4. Cleaning or Repairs After You Move Out
- Expenses for cleaning or repairing your former rented home or principal residence after leaving are not allowed.
5. Mail Forwarding Costs
- Fees for Canada Post mail forwarding are considered personal and not deductible.
6. Temporary Living Expenses Beyond the CRA Limit
- While temporary living expenses near your new job may be deductible for a short period, extended stays or costs beyond CRA’s limits are not eligible.
7. Expenses for Buying or Selling Furniture
- Purchasing new furniture or replacing household items after moving cannot be claimed.
8. Mortgage Penalties
- If you break your mortgage due to the move and pay a penalty, that cost is not deductible.
🧾 Why These Are Excluded
Most of the above fall under personal lifestyle or convenience expenses — costs that vary widely between individuals and cannot be clearly tied to income generation.
The CRA aims to allow deductions only for expenses that are:
- Clearly related to the move for employment or study purposes, and
- Easy to verify with documentation such as receipts, contracts, or invoices.
📘 CRA Reference: Interpretation Bulletin IT-178R3
Although it has been archived (meaning it’s no longer actively updated), CRA’s Interpretation Bulletin IT-178R3 remains a valuable reference for understanding moving expense rules. It provides examples, detailed explanations, and clarifies grey areas such as student moves or partial-year relocations.
You can find it by searching “CRA IT-178R3 Moving Expenses” online and reviewing the PDF version for additional guidance.
🪄 Tip for New Tax Preparers
When reviewing moving expenses for a client (or yourself), always ask:
“Is this expense directly related to earning income or attending school after the move?”
If the answer is no or uncertain, it’s safer to treat the expense as non-deductible.
Summary Table:
| Expense Type | Deductible? | Reason |
|---|---|---|
| Travel to new home (moving van, gas, meals) | ✅ Yes | Directly related to the move |
| House-hunting or job-hunting trips | ❌ No | Personal and subjective |
| Cleaning/repairs to sell old home | ❌ No | Personal upkeep |
| Real estate commission & legal fees | ✅ Yes | Direct selling costs |
| Mail forwarding | ❌ No | Personal convenience |
| Temporary lodging (reasonable duration) | ✅ Yes | Transitional expense |
| Mortgage penalty | ❌ No | Financial cost, not moving-related |
Using the Simplified Method for Travel and Filling Out the T1-M Form
Moving expenses are one of those areas in Canadian tax preparation that sound straightforward — until you start listing receipts, calculating distances, and figuring out which costs are eligible. Fortunately, the Canada Revenue Agency (CRA) offers a simplified method for claiming certain moving expenses.
In this section, we’ll break down what the simplified method is, when to use it, and how it ties into the T1-M Moving Expenses Deduction form — without referring to any tax software, so you can fully understand how it works from the ground up.
🧾 What Is the Simplified Method?
The simplified method is an easier way to calculate certain moving expenses — specifically meal and vehicle costs — without needing to keep detailed receipts.
Instead of saving every restaurant and gas station receipt, you can use the CRA’s flat-rate allowances to estimate these expenses.
This method is meant to save time and effort for taxpayers who made a qualifying move, though in many cases, the “actual expense” method may result in a larger deduction.
✅ What You Can Claim Using the Simplified Method
Under the simplified method, you can claim:
- Meal expenses based on a flat daily rate, and
- Vehicle expenses based on the number of kilometers driven for the move.
Let’s look at these in more detail:
🍴 Meals
- CRA allows a flat rate per meal (currently around $17 per meal, or up to $51 per day for three meals).
- You simply multiply the daily meal rate by the number of days you were traveling during your move.
Example:
If you spent 2 days traveling from Halifax to Toronto, you can claim:
$51 × 2 = $102 in meal expenses (no receipts required).
🚗 Vehicle Expenses
- The CRA sets a per-kilometre rate, which varies by province or territory.
- You multiply the total distance driven by the rate for your region.
(You can find the current rates by searching “CRA automobile allowance rates” or “simplified method moving expenses” on the CRA website.)
Example:
If you moved 1,000 km and your province’s rate is $0.61 per km, you can claim:
1,000 × $0.61 = $610 for vehicle expenses.
⚖️ Simplified vs. Detailed Method
| Method | What You Need | Pros | Cons |
|---|---|---|---|
| Simplified | Only need total travel days and distance moved | Easier, no receipts required | May result in a smaller deduction |
| Detailed (Actual) | All receipts for meals, gas, lodging, etc. | More accurate, often higher claim | Time-consuming and requires good recordkeeping |
👉 Tip: The simplified method is most useful for long-distance moves where tracking every small expense would be impractical (e.g., moving from Newfoundland to British Columbia).
For shorter moves or when you have detailed receipts, the actual expense method may be better.
📄 The T1-M Moving Expenses Deduction Form
The T1-M form is used to calculate and report moving expenses when you file your income tax return. It’s not a complicated form once you understand the key sections.
Here’s how it’s structured:
Part 1 – The 40-Kilometre Rule
Before you can claim any moving expenses, your new home must be at least 40 kilometres closer to your new job, business location, or school than your old home.
You’ll need to provide:
- Distance from old home to new work/school, and
- Distance from new home to new work/school.
If the difference is less than 40 km, your moving expenses cannot be deducted — even if you incurred them.
Example:
- Old home to work: 70 km
- New home to work: 20 km
Difference = 50 km → ✅ Eligible
Part 2 – Personal Information
Here you’ll enter:
- Your old address and new address
- The date of your move
- The date you started your new job or studies
If you’re helping a client, you’ll need this information from them.
Part 3 – Moving Expenses Calculation
This is where you list all eligible moving expenses. You’ll see a clear distinction between:
- Expenses using the simplified method (for meals and travel), and
- Other actual expenses (for accommodation, storage, legal fees, etc.).
The form provides line items for:
- Travel (vehicle or airfare)
- Meals
- Temporary accommodation
- Costs of selling your old home (legal fees, real estate commissions)
- Costs of buying a new home (limited)
- Storage, moving company, etc.
👉 Important:
If it’s listed on the T1-M form, it’s considered acceptable by the CRA — so following the form ensures you stay within allowable limits.
Part 4 – Determining the Deduction Limit
In this section, you compare:
- Your total eligible moving expenses, and
- Your eligible income earned at the new location.
You can only deduct up to the amount of income earned at your new job, business, or school.
If your moving expenses exceed that income, the unused amount can be carried forward to a future year — as long as it relates to the same move.
Example:
- Total moving expenses: $5,000
- Income earned at new job: $3,000
→ You can claim $3,000 this year and carry forward $2,000 to next year.
Who Can Claim Moving Expenses
To qualify:
- Your move must bring you at least 40 km closer to your new work, business, or full-time school.
- You must have earned income at the new location (employment, self-employment, or research).
- Students moving for full-time post-secondary education may also claim eligible expenses against scholarships or grants.
🧠 Key Takeaways for New Tax Preparers
- The simplified method uses CRA-set flat rates — no receipts needed.
- It applies only to meals and vehicle expenses.
- The T1-M form must always show that the move meets the 40 km rule.
- Moving expenses can only be deducted against income earned at the new location.
- Unused expenses can be carried forward to a future year.
📘 Where to Learn More
You can review the current rates and the full list of eligible and non-eligible expenses on the CRA’s official page:
Search for “CRA Moving Expenses (T1-M)” on canada.ca.
In short:
The simplified method is a great time-saver when documentation is limited — but it’s not always the most beneficial financially. The T1-M form helps ensure your claim is accurate, complete, and compliant with CRA requirements.
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