Principal Issues: Whether a student receiving a "taxable training allowance" to attend college on a full-time basis can deduct moving expenses provided that the other criteria for eligibility are met.
Position: Probably not.
Reasons: Section 62 does not provide for moving expenses to be deductible against this source of income.
XXXXXXXXXX
2010-038860
Andrea Boyle, CGAFebruary 2, 2011
Dear XXXXXXXXXX :
Re: Moving Expenses
I am writing in reply to your email dated November 26, 2010, in which you asked whether a particular individual can deduct moving expenses which she incurred to attend college on a full-time basis against a taxable training allowance that she receives from a program that is co-funded by the government of Saskatchewan and the federal government. You have indicated that, when the individual moved to attend the college, her new residence was more than 40 kilometres closer to the college than her old residence was.
The particular situation outlined in your email relates to a factual one, involving a specific taxpayer. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002.
Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. We are, however, prepared to offer the following general comments, which may be of assistance.
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").
Under section 62 of the Act, there may be deducted in computing a taxpayer's income for a taxation year amounts paid by the taxpayer as or on account of moving expenses incurred in respect of an eligible relocation, to the extent that the total of those amounts does not exceed the total of all amounts, each of which is an amount included in computing the taxpayer's income for the taxation year:
- from the taxpayer's employment at a new work location,
- from carrying on the business at the new work location,
- because of subparagraph 56(1)(r)(v) as "Wage Earner Protection Program" in respect of the taxpayer's employment at the new work location,
- because of 56(1)(n) as scholarships, fellowships, bursaries, prizes for achievement at the location of a university, college or other educational institution, and
- because of 56(1)(o) as research grants at the new location.
Subparagraphs 56(1)(r)(i), (ii), (iii) or (iv) require that certain amounts received as earning supplements under government-sponsored projects or as financial assistance under programs established by the Canada Employment Insurance Commission, or under similar programs established by other government entities or organizations pursuant to agreement with the Commission, be included in computing the recipient's income.
Based on the limited description provided, the training allowance paid to the individual in this case appears to be government assistance from a source described in either 56(1)(r)(i), (ii), (iii), or (iv) and therefore does not appear to among the sources of income against which moving expenses may be deducted.
We trust that these comments will be of assistance.
Yours truly,
Guy Goulet CA, M.Fisc.
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch