By TaxNorth Editorial Team
Moving is expensive, and Canada does allow a moving expense deduction on your tax return. However, the rules for newcomers arriving from outside Canada are strict.
Under CRA rules, most newcomers moving to Canada for the first time cannot deduct the cost of that international move. The standard moving expense deduction generally applies to moves between locations within Canada by people who are already Canadian tax residents. There is an exception for certain full-time students who receive taxable Canadian scholarship, bursary, fellowship or research grant income — those students may be eligible to claim moving costs to attend their institution even from outside Canada. This exception does not apply to most newcomers.
You can claim moving expenses if you relocate between cities within Canada after you have already arrived and settled as a Canadian tax resident. The move must be to start working at a new job, run a business at a new location, or attend a post-secondary institution as a full-time student.
To qualify using Form T1-M, your new home must bring you at least 40 kilometres closer to your new workplace or educational institution. This distance is measured by the shortest normal public route. Moving to a different apartment in the same city usually does not qualify.
If your move qualifies, you can generally claim travel costs for you and your family, up to 15 days of temporary meals and lodging, moving company or truck rental fees, and certain costs associated with your old and new home. You cannot claim job search trips, passport fees, or new furniture purchases. Review the CRA's moving expense guidance for the complete list.
You can only deduct moving expenses against income earned at your new work or school location. If your moving costs exceed your eligible income in the first year, you can generally carry the remainder forward. If your employer reimbursed your moving costs, you can only claim amounts that were included as taxable income on your T4.
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