Amounts paid to earn income from business or employment are sometimes deductible from your personal tax return, depending on the circumstances.
The General Rules
When someone moves more than 40km away for employment purposes, some expenses related to moving are deductible. This applies even to self-employed individuals, if the expenses were incurred to enable the taxpayer to run a business elsewhere.
Expenses would be deducted against any income that you earn at your new business, and if the expenses exceed your income, undeducted amounts can be carried forward to apply against the employment/business income of future years.
Deductible costs include:
- travelling costs (for you and your family, including temporary lodging of up to 15 days near your old or new home)
- meal expenses for yourself and your family members. There are two options to calculate the amount you can deduction:
Detailed method – whereby you must keep your receipts and claim the actual amount spent, or
Simplified method - $17/meal, up to $51/day per person, with no receipts required.
- vehicle expenses. There are also two methods to calculate these
Detailed method – whereby you must keep your receipts and claim the actual amount spent (eg. oil change, car insurance, tires, etc.), pro-rated for the kilometres spent moving versus the kilometres used for other purposes, or
Simplified a deduction of $0.475 per km (in BC).
- costs for transportation / storage,
- selling costs of your old residence (eg. commission paid to realtor, mortgage penalty) or cost of cancelling the lease of your old home,
- legal fees to acquire your new residence, and
- cost of revising legal documents, such as replacing your driver's license, or utilities connection/disconnect costs.
Reimbursed Expenses or Renovations
If your employer paid for any portion of your moving expenses, those specific expenses cannot be deducted, or else the reimbursements must reported as income.
When a new space for your business requires renovation, these costs are not considered moving expenses. Rather, these expenses will be dealt with in your business, as capital or leasehold improvements, etc.
Finally, a word of caution: any costs related to trips made prior to the move, such as visiting the new location to find a suitable residence or for job hunting, are not deductible.
For a discussion related to your specific circumstances, please contact your trusted accountant, as the listing above is only a brief summary of available deductions.
As always, Get in Touch with OMNI if you have any questions or comments!