24 February 2010 External T.I. 2010-0353971E5 - Moving expenses - less than 40 km

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Are moving expenses deductible if the new residence is less than 40 km closer to the new work location than the old residence?

Position: No.

Reasons: Based on the definition of "eligible relocation" in subsection 248(1), the new residence must be at least 40 km closer to the new work location than the old residence.

XXXXXXXXXX 								2010-035397

February 24, 2010

Dear XXXXXXXXXX :

Re: Moving Expenses

We are writing in response to your letter dated December 31, 2009, wherein you asked if your moving expenses would be deductible for income tax purposes.

You advise that the moving expenses were incurred in respect of moves made in 2007 and 2008. In 2007, you accepted employment as the superintendent of a building and you moved into the building located 5 kilometres from your old residence. In 2008, you moved again when you became the superintendent of a new building located 9 kilometres from your first residence. You received a moving allowance in respect of your move to the new building but it did not cover your total moving costs. Your employment at the new building terminated later in 2008 and you moved from the new building to your current residence located 9 kilometres away. In your opinion, you should be entitled to deduct your out-of-pocket moving costs as you were required, as a condition of employment, to move into the building where you were employed as the superintendent.

Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca under "forms and publications". Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.

Our Comments

Subsection 62(1) of the Income Tax Act (the "Act") provides that, subject to certain conditions and limits, a taxpayer may deduct moving expenses that are paid by the taxpayer in respect of an "eligible relocation". The term "eligible relocation" is defined in subsection 248(1) of the Act to include a relocation that enables a taxpayer to be employed or carry on business at a new work location in Canada, where the new residence is located at least 40 kilometres closer to the new work location than the old residence. It remains a question of fact as to whether a particular relocation will be an eligible relocation.

In the situation described, your move in 2007 to a new residence to commence your job as a superintendent did not result in the new residence being located at least 40 kilometres closer to the new work location than the old residence. The same can be said about your move in 2008 to the new building. Consequently, the two moves do not qualify as an "eligible relocation" for the purposes of section 62 of the Act. With regard to the move to your current residence in 2008, it does not meet all the requirements of an "eligible relocation". Specifically, you did not move to start to carry on a business or to be employed at the new location and the move was only 9 kilometres away from your prior residence. Therefore, in our view, the moving expenses you incurred in respect of your moves in 2007 and 2008 are not deductible for income tax purposes. For more information on what eligible moving expenses a taxpayer is allowed to deduct, including the limitations on the amount of the deduction, please refer to Form T1-M, Moving Expenses Deduction, and Interpretation Bulletin IT-178R3 (Consolidated), Moving Expenses.

We note that the role of the CRA is to administer and enforce the Act as passed by Parliament. Amendments to the Act are the responsibility of the Department of Finance. Should you wish to pursue your concerns further, you may write to the officials in the Tax Policy Branch at the Department of Finance, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.

We trust that these comments are of assistance.

Yours truly,

Jenie Leigh
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch