Principal Issues: [TaxInterpretations translation] Are a taxpayer's moving expenses deductible in computing income in a particular situation?
Position: No.
Reasons: There must be a causal link between the relocation of a taxpayer and the fact that the taxpayer is being relocated to allow the taxpayer to be employed in a place in Canada.
XXXXXXXXXX I. Landry, M. Fisc. 2011-042320
February 28, 2012
Dear Sir,
Subject: Moving expenses
This is in response to your letter of September 26, 2011 in which you asked us if you can deduct your moving expenses in computing your income.
Briefly, you indicated that you have held part-time jobs with three different employers for a period of about 10 years. You finally got a full-time job with one of those employers. As a result of that full-time position, you sold your home and acquired a new home in order to get closer to your place of full-time work. For the purposes of this request, we have assumed that the distance between your former home and your full-time workplace is at least 40 kilometers greater than the distance between your new home and that workplace.
All legislative references herein are to the provisions of the Income Tax Act (the "Act").
Our Comments
In order for a taxpayer to be able to deduct moving expenses under subsection 62(1), the moving expenses must, in particular, be incurred in relation to an "eligible relocation" as that term is defined in subsection 248(1). A relocation of a taxpayer is an "eligible relocation" if certain conditions are met. Among other things, the relocation must "... occur to enable the taxpayer to … be employed at a location… in Canada". As stated in paragraph 15 of Interpretation Bulletin IT-178R3, Moving Expenses, moving expenses are deductible only when the reason for the residential move is, among other things, to begin employment. To determine whether or not a move is made to obtain employment, all relevant facts must be taken into account.
Based on the information you provided, we are of the view that you have not changed your place of residence to obtain employment because you already had part-time employment with the same employer prior to your move. Consequently, we are of the view that your moving expenses cannot be deducted from your income under section 62.
Best regards,
Michel Lambert, CA, M. Fisc.
for the Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and
Regulatory Affairs Branch