Deductions can ease the cost of moving

As the economic downturn deepens and job losses across the country mount, more Canadians may have to look beyond their town, city or even province to find work.

As the economic downturn deepens and job losses across the country mount, more Canadians may have to look beyond their town, city or even province to find work.

Feb. 6 figures from Statistics Canada showed employment declined by 129,000, or 0.6 percentage points, in January to 7.2 per cent, the largest monthly decline during the previous economic downturns of the 1980s and 1990s.

The largest declines were in Ontario, British Columbia and Quebec. Employment was little changed in the other provinces.

“For the last few years, workers from the East Coast have been going to Alberta to work in the oil industry,” said Cleo Hamel, senior tax analyst with H&R Block Canada. “With the economy slowing and the price of oil dropping, however, the work is not as plentiful and people may be looking to head home or move to another province with better prospects.”

Moving is a costly proposition. Typically, you could incur transportation costs to move your household effects and your family, as well as expenses for hotel stays and meals, the cost of breaking existing leases for renters, real estate commissions and legal fees to buy and sell your home, and even fees to connect and disconnect utilities.

Unfortunately, many Canadians don’t realize that some of their moving expenses may be tax deductible.

If you’re employed and establish a home at least 40 km closer (by the shortest public route) to a new job than your old home, then you qualify to deduct some of your moving expenses. If your employer reimburses you for moving expenses, however, you cannot claim a deduction.

If you’re self-employed and establish a home at least 40 km closer to your new operational business than your old home, you also may qualify.

There are a number of expenses you can claim.

Travelling expenses, including vehicle costs, meals and accommodation to move you and members of your household are deductible, as are transportation and storage costs, such as packing, hauling, in-transit storage and insurance.

You’re allowed to claim costs for up to 15 days for meals and temporary accommodation near either residence. You can deduct the cost of selling your old residence, including real estate commissions, legal fees and any penalties you may incur for breaking a rental lease agreement.

You also can claim legal fees for purchasing your new residence and any taxes — except for GST, HST or property taxes — for the transfer or registration of title to the new residence if you or your spouse or common-law partner sold the old residence.

As well, you can claim some incidental costs, such as replacing your driver’s licence, changing your address on legal documents, utility hookups and disconnections, and costs to maintain your old residence when it’s vacant.

Certain things are not deductible, such as doing work on your home to make it more saleable or any losses on the sale, expenses for job- and house-hunting in another city, mail-forwarding costs and expenses to clean or repair a rented residence to meet the landlord’s standards.

Expenses need to be claimed in the year they are incurred, but any excesses can be carried forward into the next year.

It’s essential that you keep all receipts to back up your claim.

“Moving expenses are one of the most reviewed and adjusted credits claimed on tax returns, so it’s essential to keep all your receipts,” Hamel said. “But the payoff can be huge because they come right off your taxable income.”

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. He can be contacted at