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 be treated as a taxable benefit even if specific reimbursement has occurred.
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.