26 June 2012 External T.I. 2011-0427911E5 - Reimbursement of moving expense

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: Is the employer reimbursement for costs related to moving a taxpayer's household goods to Canada a taxable benefit under paragraph 6(1)(a) of the Act?

Position: In this case, no.

Reasons: As noted in IT-470R, "where an employer reimburses an employee for the expenses incurred by the latter in moving the employee and the employee's family and household effects either because the employee has been transferred from one establishment of the employer to another or because of having accepted employment at a place other than where the former home was located, this reimbursement is not considered as conferring a taxable benefit on the employee."

XXXXXXXXXX
													2011-042791
													P. Waugh

June 26, 2012

Dear XXXXXXXXXX:

Re: Reimbursement of moving expenses

We are writing in response to your letter of November 10, 2011 concerning the taxation of a moving expense reimbursement.

In the situation you described, a taxpayer moved from XXXXXXXXXX to Canada to begin work with a Canadian company. The taxpayer, with his family, rented a fully furnished home in Canada for one year to determine how the transition would go. After the one year trial, the taxpayer decided to remain working for the Canadian company, moved from the rented home to another residence, and moved his household goods from XXXXXXXXXX to Canada. The employer reimbursed the taxpayer for the actual cost of moving the household goods (i.e. a direct reimbursement).

Our Comments

The determination of whether specific moving expense reimbursements are taxable benefits is a question of fact. We would refer you to page 23 of Guide T4130, Employer’s Guide Taxable Benefits and Allowances, under the heading “Moving expenses paid by employer that are not a taxable benefit.” The Canada Revenue Agency’s general views on this issue are also discussed in paragraph 35 of Interpretation Bulletin IT-470R (Consolidated), Employees’ Fringe Benefits, which states: “where an employer reimburses an employee for the expenses incurred by the latter in moving the employee and the employee's family and household effects either because the employee has been transferred from one establishment of the employer to another or because of having accepted employment at a place other than where the former home was located, this reimbursement is not considered as conferring a taxable benefit on the employee.” We would add that while the location of the former home within Canada is required to determine whether moving expenses are deductible by an employee who does not receive a reimbursement from his or her employer, it has no impact in determining whether an employer who has reimbursed such expenses has conferred a taxable benefit on the employee. Provided the moving expenses are within the general guidelines discussed in the above-noted publications, the employer’s reimbursement would not be a taxable benefit for a new employee who has relocated from outside Canada.

While the determination as to whether an employer’s reimbursement of an employee’s personal living expense constitutes a taxable benefit or not remains a mixed question of fact and law, based on the information you have supplied, it is our view that the employer’s reimbursement for the costs related to moving the taxpayer’s household goods to Canada would not be considered a taxable benefit under paragraph 6(1)(a) of the Act.

We trust these comments will be of assistance.

Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch