Moving Expenses

Rules of Application

  • A relocation is considered an eligible relocation if:
    • a person relocates for employment purposes; and
    • the distance between the new work location and the new residence is at least 40 km closer than from the new work location to the old residence.
  • When an employer makes a payment in respect of moving expenses incurred for an eligible relocation:
    • if the payment is considered a reimbursement of specific expenses, it is not a taxable benefit.
    • if the payment is made with no requirement to account for expenses, it is treated as a taxable benefit.
  • Types of expenses that can be reimbursed by an employer without giving rise to a taxable benefit are:
    • cost of house-hunting trips;
    • travel costs while moving;
    • reasonable temporary living expenses (up to 15 days);
    • transporting or storing personal effects;
    • charges and fees to disconnect and reconnect services (e.g. utilities, telephone, etc.);
    • fees to cancel a lease;
    • costs of selling a home (including advertising, notarial or legal fees, real estate commissions and mortgage discharge penalties);
    • costs incurred with respect to the residence that remains vacant after relocation (mortgage interest, property taxes, utilities, and insurance) to a maximum of $5,000;
    • legal fees and land transfer tax to purchase the new residence.

  • Costs that are not allowable moving expenses will generally be treated as a taxable benefit.

    Computation of Benefit

Allowance:

Federal (Administrative Position)

  • If the allowance is < $650, it is considered a reimbursement of specific expenses as long as the employee certifies in writing that total moving expenses incurred were at least equal to $650.
  • If the allowance is > $650, the amount in excess of $650 (if certification obtained) is considered taxable benefit.

Example:

Employee receives $750 moving allowance:

  • employee certifies in writing that moving costs were at least $650
  • $100 = taxable benefit

Quebec

  • Taxable benefit = portion of the allowance that exceeds an amount equivalent to the employee’s salary or wages for 2 weeks.
  • Employee deduction:
    • An employee can claim deductions for allowable moving expenses where the employer does not reimburse moving costs.
    • If a partial reimbursement received, a deduction only on the amount in excess of the reimbursement.
  • An allowance is included in taxable income.
  • Benefit includes applicable GST/QST/HST.