Moving Expenses: When and How to Deduct Them from Income (Canada)

1. Quick Snapshot: Do You Qualify?

You can deduct eligible moving expenses if you moved your ordinary residence to start work (employment or self‑employment) in a new location or to attend a post‑secondary program as a full‑time student, and your new home is at least 40 km closer to the new work location or school (measured by the shortest public route). :contentReference[oaicite:1]{index=1}

The deduction is claimed on line 21900 of your T1 return and is limited to specific types of income earned at the new location (or taxable scholarship‑type income for students). Any unused amount can generally be carried forward and deducted in a later year when sufficient eligible income is available. :contentReference[oaicite:2]{index=2}

2. Who Can Claim (Employees, Self‑Employed, Students, Families)

2.1 Employees & Self‑Employed Individuals

If you moved to a new home to work as an employee or to run a business from a new location, you may deduct eligible moving expenses from the employment or self‑employment income earned at that new work location. You cannot deduct these costs from other income sources such as investment income or EI benefits. :contentReference[oaicite:3]{index=3}

2.2 Full‑Time Students

Full‑time students who move to attend a qualifying post‑secondary program can deduct eligible moving expenses, but only against portions of taxable scholarships, fellowships, bursaries, certain prizes, or research grants that must be included in income. Students who also work (including summer jobs or co‑op placements) may deduct eligible moving expenses from employment or self‑employment income earned at the new location, provided the 40‑km test is met for each move. :contentReference[oaicite:4]{index=4}

2.3 Family Members & Shared Moves

You can claim amounts paid to move yourself, your family, and household effects; household members do not need to travel together or at the same time. Where both spouses/common‑law partners have an eligible relocation as part of the same change in residence, the CRA administrative practice allows the couple to decide how to share the deduction, provided statutory conditions are otherwise met. :contentReference[oaicite:5]{index=5}

3. The 40‑Kilometre Distance Test (How to Measure Correctly)

To qualify, your new home must be at least 40 km closer to the new work location or school than your old home, calculated using the shortest normal public route (typically driving distance via public roads). If the difference is 39.9 km, you do not qualify. :contentReference[oaicite:6]{index=6}

The T1‑M form includes a simple worksheet: subtract the distance from the new home to the new work (or school) from the distance between the old home and the new work (or school); if the result is under 40, stop—no deduction. :contentReference[oaicite:7]{index=7}

The CRA expects that you have established the new home as the place you normally live (for example, by selling or renting/advertising the old home). Temporary accommodation without establishing residence may not satisfy the requirement. :contentReference[oaicite:8]{index=8}

4. What Income You Can Deduct Against & Carryforwards

The moving expense deduction can only offset net eligible income earned at the new work location—this means relevant employment (T4/T4A) or self‑employment income reported for that location, reduced by certain deductions (e.g., RRSP, pension, union dues, employment expenses) tied to that income. The T1‑M and CRA guidance explain how to compute this figure. :contentReference[oaicite:9]{index=9}

For students, the comparable limit is the portion of taxable scholarships, fellowships, bursaries, certain prizes, or research grants included in income for the year; if also employed at the new location, employment income may also support a deduction (subject to meeting the 40‑km test for that work move). :contentReference[oaicite:10]{index=10}

If your net moving expenses exceed your net eligible income in the year of the move, the unused balance can be carried forward and deducted in a future year against income earned at the same new location (or comparable scholarship‑type income for students). There is no one‑year expiry; you carry forward until used. :contentReference[oaicite:11]{index=11}

You may claim eligible moving expenses paid in a later year (for example, selling costs on a home that closed after year‑end) on the return for the year in which you actually paid them—provided the original move met the conditions. However, you cannot carry back expenses to amend a prior year return if they were paid in a subsequent year. :contentReference[oaicite:12]{index=12}

Income at the new location can include amounts from more than one employment or business at that location; the deduction cannot exceed the total eligible income across those sources. :contentReference[oaicite:13]{index=13}

5. Eligible Moving Expense Categories

Once you meet the purpose and distance tests, many costs directly tied to relocating your household become deductible. Key categories below mirror the T1‑M lines and CRA guidance; always keep supporting documents even when using the simplified method. :contentReference[oaicite:14]{index=14}

• Transportation & Storage of Household Effects: Packing, hauling, movers, in‑transit storage, and insurance for household items (boats, trailers included). :contentReference[oaicite:15]{index=15}
• Travel to New Home: Vehicle expenses, meals, and accommodation for you and household members while en route; choose detailed (actual receipts) or simplified rates. :contentReference[oaicite:16]{index=16}
• Temporary Living (Max 15 Days): Meals and lodging near the old or new home when you cannot move in immediately; detailed or simplified allowed (documentation of days may be requested). :contentReference[oaicite:17]{index=17}
• Lease Cancellation on Old Residence: Fees/penalties to end a rental lease (excluding regular rent owed before cancellation). :contentReference[oaicite:18]{index=18}
• Incidental Move Costs: Changing address on legal docs, replacing driver’s licences & vehicle permits (non‑commercial), utility hookups/disconnections. :contentReference[oaicite:19]{index=19}
• Cost to Maintain Vacant Old Home (Max $5,000): Interest, property taxes, insurance, heat & utilities while listed for sale, provided home is vacant and not rented. :contentReference[oaicite:20]{index=20}
• Cost of Selling Old Home: Advertising, legal/notary fees, real estate commission, mortgage prepayment penalty. :contentReference[oaicite:21]{index=21}
• Cost of Buying New Home (Limited): Legal/notary fees and land transfer/registration taxes (other than GST/HST) only if you (or your spouse/partner) sold the old home because of the move. :contentReference[oaicite:22]{index=22}
• Household Members Need Not Travel Together: CRA allows claiming for eligible family travel even if trips are staggered. :contentReference[oaicite:23]{index=23}

6. Ineligible / Commonly Denied Expenses

The CRA specifically lists amounts that do not qualify—even when clearly related to moving. Avoid padding your claim with the following costs. :contentReference[oaicite:24]{index=24}

• Repairs, renovations, or staging costs to make the old home more saleable. :contentReference[oaicite:25]{index=25}
• Loss on sale of old home. :contentReference[oaicite:26]{index=26}
• House‑hunting trips taken before the move. :contentReference[oaicite:27]{index=27}
• Job‑search travel to another city (prior to establishing the new home). :contentReference[oaicite:28]{index=28}
• Cleaning/repair costs to satisfy a landlord when leaving a rental (beyond lease cancellation fee). :contentReference[oaicite:29]{index=29}
• Mail‑forwarding services (e.g., Canada Post redirection). :contentReference[oaicite:30]{index=30}
• Replacement of personal‑use items (sheds, drapes, firewood, carpets) discarded in move. :contentReference[oaicite:31]{index=31}
• Transformers/adaptors for appliances to function in new jurisdiction. :contentReference[oaicite:32]{index=32}
• Mortgage default insurance premiums. :contentReference[oaicite:33]{index=33}
• Delaying sale for investment/market timing — related carrying costs generally not deductible beyond the specific $5,000 vacant‑home cap under eligible rules. :contentReference[oaicite:34]{index=34}
• Moving a mobile home (except up to the estimated cost of moving personal effects separately). :contentReference[oaicite:35]{index=35}

7. Special Situations & Edge Cases

7.1 Old Home Didn’t Sell Right Away

You may claim up to $5,000 of specified carrying costs (interest, taxes, insurance, utilities, heat) for the vacant old residence while reasonable efforts were made to sell it, provided it was not rented during that period. :contentReference[oaicite:36]{index=36}

7.2 Expenses Paid After the Year of the Move

If you pay eligible selling or other move‑related costs in a year after the move (for example, legal fees when the sale closes later), claim them in the year paid against income at the new location; you cannot amend the prior year to add them. :contentReference[oaicite:37]{index=37}

7.3 Multiple Moves / Interim Housing

Where a move occurs in stages (e.g., temporary rental before final home), CRA may treat it as a single move from the original old residence to the final new residence if the interim stop was not where you “ordinarily resided”; however, if you genuinely established residence in each place, each may be a separate relocation—only those satisfying the tests qualify. :contentReference[oaicite:38]{index=38}

7.4 Spouses with Separate Eligible Relocations

If both spouses/common‑law partners have eligible relocations arising from the same overall move (for example, each starts a new job in the new city), CRA generally allows the couple to decide how to share the deduction, subject to statutory conditions and no double‑deducting of the same expense. :contentReference[oaicite:39]{index=39}

7.5 Employer Reimbursements & Allowances

If your employer reimbursed or paid your eligible moving expenses, you can only claim the deduction if you include the amount in income or reduce your claim by the reimbursed amount. CRA may request a letter from the employer confirming which costs were (or were not) covered. :contentReference[oaicite:40]{index=40}

From an employer payroll perspective, many relocation payments for moving an employee, the employee’s family, and household effects are not taxable benefits when they meet CRA’s non‑taxable criteria; amounts outside those guidelines become taxable benefits to the employee. :contentReference[oaicite:41]{index=41}

7.6 Students Moving Each Academic Term

Students (including co‑op) may claim moving expenses at the start of each academic/work period—subject to the 40‑km rule and the requirement that there is eligible income (taxable scholarship amount or employment) to deduct against for that year. :contentReference[oaicite:42]{index=42}

7.7 Moves To/From or Between Countries

You can claim eligible moving expenses for a move to or from Canada if you are a full‑time student or a factual/deemed resident of Canada and you moved from one place where you normally lived to another place where you normally lived. Temporary overseas assignments where you keep significant residential ties in Canada (family remains) generally do not qualify as a new place where you “normally live.” :contentReference[oaicite:43]{index=43}

Moves between two locations outside Canada may also qualify if you are a factual or deemed Canadian resident; jurisprudence shows that the “in‑Canada” rule is narrow and exceptions typically apply to those temporarily absent but still resident (e.g., certain government, military, or student situations), so confirm your residency status carefully. :contentReference[oaicite:44]{index=44}

8. Detailed vs. Simplified Methods for Meals & Vehicle

For travel and temporary living components, CRA lets you choose between the detailed method (claim actual documented costs) and the simplified method (use CRA flat meal rate & cents‑per‑kilometre vehicle rate for the province/territory where the trip began). You may mix methods by category (e.g., detailed vehicle, simplified meals) if that best reflects records—just be consistent within each category. :contentReference[oaicite:45]{index=45}

Meal Rate: For the 2024 tax year the simplified rate is $23 per meal, up to $69 per person per day (sales tax included); CRA has kept this flat rate unchanged since 2022, but check for a 2025 update before filing. :contentReference[oaicite:46]{index=46}

Vehicle Rate: Multiply kilometres driven for the move by the CRA cents/km rate for the province or territory where travel began (rates updated annually; 2024 examples range ~54.5¢ to 71.5¢/km). Keep a mileage log even when using simplified rates—CRA can ask for support. :contentReference[oaicite:47]{index=47}

9. How to Claim: Form T1‑M & Line 21900 Step‑by‑Step

1. Download Form T1‑M (current year) from CRA. One form per eligible move. :contentReference[oaicite:48]{index=48}
2. Complete Part 2 Distance Worksheet. Confirm 40‑km test; stop if not met. :contentReference[oaicite:49]{index=49}
3. Enter Move Details (Part 3): Dates, addresses, reason (work/business or study). :contentReference[oaicite:50]{index=50}
4. Tally Allowable Costs (Part 4): Enter each eligible category; subtract any employer reimbursements/allowances not included in income. :contentReference[oaicite:51]{index=51}
5. Compute Net Moving Expenses (Line 26) & Net Eligible Income (Line 28). Form instructions walk through which T1 lines feed the calculation. :contentReference[oaicite:52]{index=52}
6. Carryforward (Line 30) if applicable. Track unused amount for future years. :contentReference[oaicite:53]{index=53}
7. Transfer to T1 Return: Enter the allowable deduction (line 29 on T1‑M) on line 21900 of your Income Tax and Benefit Return. :contentReference[oaicite:54]{index=54}
8. Do Not Mail Receipts with E‑Filed Return (keep on file). CRA may request later; maintain evidence. :contentReference[oaicite:55]{index=55}

10. Receipts, Logs & Audit Readiness

Although receipts often need not be submitted with an electronic return, CRA can ask for them at any time—keep supporting documents for all claimed amounts, including those calculated under the simplified method (distance logs, dates of temporary lodging, and proof of payment). :contentReference[oaicite:56]{index=56}

Good records include: mover invoices, fuel & maintenance receipts (if detailed method), mileage logs, hotel folios, meal receipts (if detailed), signed lease cancellation notices, real estate commission statements, legal closing documents, utility hookup bills, and proof your old home was actively listed for sale when claiming vacant‑home costs. :contentReference[oaicite:57]{index=57}

Because CRA can test the reasonableness of amounts (Income Tax Act s. 67), retain context—quotes from alternative movers, explanations for high remote‑area costs, and evidence of household composition. :contentReference[oaicite:58]{index=58}

11. Worked Examples (Illustrative)

The numbers below are simplified to illustrate mechanics; they are not official CRA calculations.

12. Moving Expense Timing Checklist

Before You Move

• Confirm new address qualifies (40‑km rule). :contentReference[oaicite:62]{index=62}
• Gather estimates: movers, storage, travel costs; note which employer will reimburse. :contentReference[oaicite:63]{index=63}
• Track anticipated sale/lease termination dates for old residence (affects eligibility for certain costs & timing). :contentReference[oaicite:64]{index=64}

During the Move

• Keep mileage log & receipts (or document simplified method distances/days). :contentReference[oaicite:65]{index=65}
• Record who traveled on which dates—household members may travel separately. :contentReference[oaicite:66]{index=66}

After Arrival

• Establish new home as primary residence (sell/rent/advertise old home). :contentReference[oaicite:67]{index=67}
• Log vacant‑home carrying costs until sale (monitor $5,000 cap; ensure not rented). :contentReference[oaicite:68]{index=68}
• Collect legal closing statements for sale & purchase; confirm old home sold due to move before claiming new‑home legal/transfer costs. :contentReference[oaicite:69]{index=69}

13. FAQs

Is the moving expense deduction a tax credit?

No. It’s a deduction from income (line 21900). Reducing taxable income can lower tax payable and potentially increase your refund if tax was withheld. :contentReference[oaicite:70]{index=70}

Can I claim if my employer paid some costs?

Yes, but only the portion you paid and were not reimbursed—unless you include the reimbursement in your income, in which case the related expenses may be claimed. CRA may ask for employer confirmation. :contentReference[oaicite:71]{index=71}