You can write off moving expenses
Just be sure the move is truly necessary for your job, writes Jamie Golombek
Under the Income Tax Act, you can write off your moving expenses, provided the distance between your old residence and your “new work location” is at least 40 kilometres greater than the distance between your new residence and the new work location.
While the Tax Act uses the term “new work location,” such a place doesn’t necessarily have to be “new” and that, in some situations, an employee can have an eligible relocation without changing his or her employer or work location. For example, an employee who relocates to assume new job responsibilities, which he or she would have been unable to assume if it weren’t for the relocation, may be able to deduct moving expenses.
A recent tax case involved an appeal by an Ontario taxpayer from a reassessment of his 2012 tax return in which the CRA disallowed his claim for nearly $32,000 of moving expenses.
In May 2012, the taxpayer, an hourly paid CAM programmer, was offered an internal company promotion to become a CAD/ CAM Developer, effective June 11, 2012. He accepted this position, which was described in the documentation as a “lateral transfer” in the same department. He continued to report to the same person as before and “all terms and conditions outlined in the Employment Agreement remain unchanged.” In fact, the only real differences were that the taxpayer went from an hourly rated position to a salaried position and the new role “involved some increased responsibilities.”
While the taxpayer was still required to report to work at the same work location, he believed that “by virtue of his expanded responsibilities, he should move closer to his work location.” As a result, on June 1, 2012, he moved his family significantly closer to his place of employment.
While it wasn’t disputed that the distance between his old residence and his work location is more than 40 kilometres greater than the distance between his new residence and work location, his place of work remained unchanged.
The Tax Court found there was no evidence he would have lost his job or opportunity for a promotion if he didn’t move nor that the company required him to move. In fact, the move, which was “committed to prior to accepting his promotion” was made “because he believed he should be closer to work, not because he had to.”
As a result, the judge denied his moving expense claim on the basis that there was no “new” work location.