Principal Issues: Can spouses or common-law partners each claim the $5,000 maximum provided for in 62(3)(g) in calculating the deduction of moving expenses.
Position: Yes
Reasons: The Act allows every taxpayer to deduct moving expenses incurred by the taxpayer in respect of an "eligible relocation" of that taxpayer.
CRA PUBLICATIONS: IT- 178R3
LEGISLATIVE REFERENCE: 62(3)(g)
HAA: No paper record.
July 12, 2010
Summerside Tax Services Office HEADQUARTERS
Joe Mundy Ann Townsend, CMA
Appeals Officer 905-721-01842010-037114
Re: Moving Expenses
I am writing in response your email dated June 15, 2010, concerning the calculation of moving expenses. In the situation you have described, a common-law couple has incurred in excess of $10,000 in expenditures for their old residence that are described in paragraph 62(3)(g) of the Income Tax Act (interest, property taxes, insurance premiums and the cost of heating and utilities in respect of the old residence). You are asking if both individuals in the common-law relationship can claim the $5,000 maximum limit for the old residence provided all of the other criteria to allow for the deduction of moving expenses have been met.
OUR COMMENTS
All statutory references in this letter are references to the provisions of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended (the "Act").
Section 62 allows an individual to deduct "eligible moving expense" when the individual moves to begin employment or business at a new location or to begin full-time attendance at an educational institution. To qualify, the individual's move must, among other things, meet the definition of "eligible relocation" in subsection 248(1): a relocation of a taxpayer that occurs to enable the taxpayer to carry on a business or to be employed at a location that is at least 40 kilometers closer to the new work or business location.
Paragraph 62(3)(g) includes in the definition of moving expenses interest, property taxes, insurance premiums and utility costs, to a maximum of $5,000, incurred for the old residence during the period that reasonable efforts are being made to sell it, and it is neither rented out nor occupied by the taxpayer or a member of the taxpayer's household.
In our view, where spouses or common-law partners have each made an "eligible relocation" in which both have moved to carry on a business or to be employed at a location that is at least 40 kilometers closer to a new work or business location, both would be entitled to deduct moving expenses under section 62. Therefore, provided all other conditions of the Act are otherwise met, there is nothing that would preclude each from deducting expenses under paragraph 62(3)(g) in respect of the old residence to a maximum of $5,000 each, provided of course the actual expenses incurred total $10,000 or more.
We trust these comments are helpful.
Yours truly,
Randy Hewlett
Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch