Moving to begin a new job? Watch your tax implications


 Canada, 18th October: Are you planning to move to a new place for beginning your new job? Well, do you know that your moving expenses might not be tax deductible?

 

Canada, 18th October: Are you planning to move to a new place for beginning your new job? Well, do you know that your moving expenses might not be tax deductible?

That’s what the new tax rules seem to suggest. As per the new tax rules, the total distance between your new work place and your old residence must be at least 40 kilometres more than the distance between your new work place and your new residence in enable you become entitled to deduction of moving expenses.
And the way the distance of 40 kilometres gets measured remains a subject of discord between the Canada Revenue Agency and the taxpayers in Canada.

The recent case of Lisa Moreland, working with Royal Canadian Mounted Police for the last five years, showed how rules that seem to be simple can quite tedious at times.

Ms. Moreland worked at Ontario office complex in Etobicoke before February 2007. However, when she was given new work duties in February 2007, she performed the same while being at the same location but in some another area located within it.

And she move to Milton, Ontario from Cambridge, Ontario in June 2007 as the new place was exactly 40 kilometres nearer to the work place. She stated that the sole purpose of changing her residence was to reduce her traveling time and to get closer to work.

So, she filed a claim for getting $26,000 as her moving expenses in the tax return for the year 2007. However, to her dismay, she was denied the claim by the CRA.

And the reasons stated by the CRA were that Ms. Moreland was not entitled to deduction of her moving expenses as she was not having a new work location under the meaning of the Income Tax Act.

Ms. Moreland argued that she changed to new residence from the old residence to get herself employed at new work place.

The conclusion by the judge was the as she did change her physical work locations for performing her new duties although she remained to be employed with the same employer. However, as she moved within the same office complex (that is, 255 Attwell Drive), so this did not, in any way, constitute to be a new work location.