Moving Expenses: Can You Deduct the Cost of Relocating? – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Moving expenses in Canada are one of the most overlooked tax deductions available to taxpayers who relocate for work, business, or full-time post-secondary education. When Canadians move to be closer to a new job, to run a business, or to attend a recognized educational institution, many of the costs associated with the move can be deducted to reduce taxable income. However, CRA imposes strict rules, especially regarding the 40-kilometre requirement, eligible expenses, and the types of income the deduction can be applied against. Many taxpayers mistakenly claim ineligible costs or do not keep proper receipts, resulting in denied deductions or CRA reassessments. Understanding how to claim moving expenses in Canada—including qualifying conditions, the 40 km rule, eligible costs, and claim timing—is essential to maximizing your refund and staying compliant.

Legal and Regulatory Framework

Moving expenses in Canada are defined under section 62 of the Income Tax Act. To qualify, the move must bring the taxpayer at least 40 kilometres closer to their new place of work or post-secondary education. The deduction applies only when the reason for the move is to earn employment income, carry on a business, or attend a qualified full-time educational program. Moving expenses may only be deducted from income earned at the new location; unused amounts can be carried forward to future years. Eligible moving expenses include transportation and storage of household items, travel expenses for the family, temporary living accommodations, the cost of cancelling a lease, real estate commissions, and legal fees related to selling a home. CRA requires detailed receipts, mileage logs, and proof of the reason for the move. Revenu Québec applies similar rules in the provincial Taxation Act, with its own specific forms for claiming moving expenses.

Key Court Decisions

Several court decisions demonstrate how strictly CRA interprets the rules surrounding moving expenses. In Gaucher v. Canada, CRA denied a moving expense deduction because the taxpayer could not prove the move reduced the commute by at least 40 kilometres. The court confirmed that the 40 km rule must be calculated using the shortest customary route. In Martyn v. The Queen, the Tax Court rejected moving expenses claimed for a relocation that the taxpayer argued was related to better job prospects, ruling that the move must be directly tied to new employment or business income. In Morin v. Canada, CRA denied temporary accommodation expenses because the taxpayer failed to provide adequate documentation. These rulings highlight the importance of meeting the strict legal requirements when claiming moving expenses in Canada, especially the 40 km test and proper record-keeping.

Why CRA Targets This Issue

Moving expenses frequently lead to CRA reviews because many taxpayers misunderstand what qualifies. CRA closely reviews claims involving large real estate fees, long-distance travel, temporary living costs, and home-sale adjustments. Common errors include claiming moving expenses for personal lifestyle relocations, deducting renovations or repairs, or applying moving expenses against the wrong type of income. CRA also monitors situations where taxpayers move multiple times within a short period or claim unusually high costs. Because moving expenses reduce taxable income directly, CRA enforces the 40 km requirement and evaluates whether the move was strictly for employment, business, or education purposes. Understanding how CRA assesses moving expenses is key to avoiding reassessment.

Mackisen Strategy

At Mackisen CPA Montreal, we help clients determine whether their relocation qualifies for moving expenses and how to maximize the deduction safely. Our first step is calculating the 40 km rule precisely using transport route mapping to ensure eligibility. We review the reason for the move, employment contracts, school enrolment documents, and business records to confirm compliance with section 62. We then categorize eligible and ineligible expenses, organize receipts, reconstruct mileage logs if necessary, and allocate costs to the correct tax year. For clients who sell their home due to relocation, we verify real estate commissions, legal fees, and home-sale documentation. When clients move long distances, we calculate the most tax-efficient way to claim travel and accommodation costs. If CRA reviews the claim, we prepare the response package with full documentation and explanations. Our tailored approach ensures Canadians claim moving expenses in Canada accurately and confidently.

Real Client Experience

A family moving from Quebec City to Montreal for a new job approached us after CRA questioned their moving expense claim. They did not calculate the 40 km rule correctly, and CRA initially disallowed the deduction. We recalculated the route, demonstrated that the family’s new home was more than 40 km closer to the new workplace, and provided supporting maps and documentation. CRA ultimately accepted the claim. In another case, a university student moved to Toronto for full-time studies but did not realize moving expenses could be applied only against income earned at the new location. We carried the deduction forward and applied it against the student’s summer income the following year, maximizing the benefit. A third client claimed ineligible moving-related renovations. We corrected the return before CRA issued a reassessment, preventing penalties. These situations show the value of professional oversight when claiming moving expenses in Canada.

Common Questions

Many taxpayers ask whether renovations, repairs, or home upgrades qualify as moving expenses. They do not. CRA allows only costs directly related to moving, selling, or relocating. Others ask whether they can claim moving expenses when moving closer to family. The move must be for employment, business, or full-time education—personal moves do not qualify. Canadians also ask whether they must sell their home to claim moving expenses. Selling is not required; renters can also qualify. Another common question concerns multiple moves. Moving expenses can be claimed each time, provided every move satisfies the 40 km rule and the relocation is tied to income. Taxpayers also ask whether meals, gas, and hotels qualify. Yes, but only if properly documented. These questions demonstrate the importance of understanding CRA requirements before claiming moving expenses.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps Canadians stay compliant while recovering the taxes they’re entitled to. Whether you are relocating for work, school, or business and want to claim moving expenses in Canada, our expert team ensures precision, transparency, and protection from audit risk.