Want a $5,000 tax deduction?
Move 40 kilometres closer to work or school and you could be eligible for some serious deductions.
Move 40 kilometres closer to work or school and you could be eligible for some serious deductions.
No one likes to move. The packing, the lifting, the loading and the driving, it’s a chore that can stress even the biggest Zen-master. But if you were put in a position where you had to move last year, you could be eligible for some substantial savings.
That’s because Canadian residents can deduct almost every expense associated with moving, and these deductions aren’t limited to your transportation and storage costs. Also on that list of eligible deductions are the following:
This tax deduction is so lucrative because most of these expenses can be claimed dollar for dollar (unless using the simplified method, as outlined by the Canada Revenue Agency). And keep in mind that not all members of your household have to travel together or at the same time.
So let’s see how this would play out for Neal, a friend who packed up his life in Toronto last November after getting married and taking a job in Vancouver:
For Neal, the $8,504 cost of moving was a direct tax deduction off his 2010 income. Now, if he had bought or sold a home he could have also added in those costs—costs that can easily exceed $25,000. These are significant deductions.
Of course, there are restrictions. You must be a Canadian citizen and make sure you keep all your receipts (although, you don’t have to submit these receipts to the CRA). Also, those on Employment Income (EI), pension income or living on investment income cannot claim the deductions. And don’t double-dip. If your employer or school helped pay for moving costs you need to include this as part of your annual income, in order to claim the additional moving expenses as a tax deduction.
Still, if you moved last year or plan on moving, then it’s worth your while to open a map and calculate how much closer you’ll be to work or school—if your 40 kilometres closer, it could really pay off.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email