Jul 19, 2017
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“Complicated rules for a simple situation.”
When an individual moves from one city to another, the issue thatoften arises is whether related moving expenses are deductible for tax purposes.
In order for moving expenses to be deductible, the expenses must be “moving expenses.” The move must be an “eligible relocation.” An eligible relocation is defined to be a relocation that enabled the taxpayer to:
Both the old and the new residences must be in Canada. The distance between the old residence and the new residence must be at least 40 kilometres.
Once it has been determined that an eligible relocation has occurred, the next point is whether the expenses paid are moving expenses for tax purposes.
Expenses included in the definition of moving expenses are:
Students may deduct moving expenses if they move from a residence in Canada or to a university in Canada. They do not have to move between a Canadian residence and a Canadian university.
Once a taxpayer has met the test of an eligible relocation and the definition of moving expenses, the amount to be deducted cannot exceed the income earned at the new employment, or business or scholarship income for a student.
As you can see, these are complicated rules for a simple situation.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.
The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.