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Claim tax relief if your move is work-related

Moving a household can be a stressful experience.

Last week, my cousin Debbie and her husband, Geoff, moved just a couple of streets over from their old place. Two days later, Deb received a phone call from her former neighbour, Mark, who was panicked because his cat had gone missing. "Deb, our cat has been missing for a couple of days now, and I'm wondering if you recall seeing him before you moved," Mark explained.

"Uh, Mark, I didn't know that you had a cat. Do you think he might have followed us to visit our cat?" Deb asked. "Deb, I didn't know you had a cat. What does your cat look like?" Mark asked.

"Well, he's got light brown fur," Deb began, "with a patch of black fur on his belly," Mark finished. "That's right," Deb said. "Deb, that's my cat! I've had him since he arrived on my doorstep two years ago!" Mark cried.

"But he's been our cat for the last two years," Deb explained.

Turns out that this stray cat has been living the high life, eating two meals a day, getting twice the attention, and having two places to call home for the past two years. Weird.

What about you? Have you moved your home this summer? If so, make sure that the cat you took is really yours, and that you claim all the tax relief you're entitled to.

The rules

You're allowed to claim moving expenses for costs you've incurred in your move provided you've relocated to enable you to carry on a business or to be employed at a location in Canada. Further, both your old and new residences must be in Canada. Now, hold on. There's an exception to these "in Canada" rules where you're absent from Canada, but are still resident in Canada for tax purposes. You'll also be entitled to claim moving expenses if the reason for your move was to attend a postsecondary school on a full-time basis.

I should mention that, to be eligible to claim moving costs, the distance from your new home to your new work location or school must be at least 40 kilometres closer than your old home to your new work location or school. In addition, the amount you can deduct is restricted to the amount of your income at your new location. If you haven't got sufficient income in the year of your move, you can carry the unused expenses forward to the following year and claim them in that year, subject to the requirement that you've got sufficient income in that year to make a claim. Finally, don't count on claiming your moving costs where your employer paid those costs on your behalf, or where you received a non-taxable full reimbursement or allowance from your employer.
The tips

I did write about common tips for moving expenses in my article on Aug. 5, 2000 (see, including the type of expenses you can claim, so I'm not going to revisit those tips here. Instead, I want to focus on a few lesser-known ideas -- some based on recent court decisions.

The court decision in Templeton v. The Queen (1997) supports that you should be able to deduct moving costs when you're self-employed and work out of your home, then continue to operate your existing business out of a new home after you move. In the past, the taxman seemed to take the view that the move had to be accompanied by the start of a new business for a deduction to be allowed.

Is it possible to deduct moving costs if you don't meet the 40-kilometre test? I'm going to suggest that it may be possible. When you run a business from your home, you've got a good argument that you're entitled to deduct a portion of moving costs as a business expense.

This is different than making a claim on line 219 of your tax return (under section 62 of our tax law) as you normally would. In this case, the 40-kilometre test should not be relevant.

Now, consider the court decision in Gary Adamson v. The Queen (2001). Mr. Adamson was required by his employer to work out of his home and he moved to a new home to provide more office space. The taxman denied his moving expenses, presumably because he wasn't starting new employment. The court allowed his deduction.

Finally, you may not need receipts to support your moving expenses, provided you can substantiate them some other way. You see, our tax law doesn't impose a requirement to provide receipts. The case Page v. The Queen (1993) supports this.

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