13 June 2001 External T.I. 2001-0079775 - MOVING EXPENSES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: An individual has asked us about the deductibility of mortgage interest as an eligible moving expense.

Position: General comments were provided. We referred the individual to paragraph 12(g) of IT-178R3.

Reasons: See principal issues and position.

XXXXXXXXXX 2001-007977
M. Eisner, CA
June 13, 2001

Dear XXXXXXXXXX:

Re: Moving Expenses - Mortgage Interest

This is in reply to your letter of April 12, 2001 concerning the above-noted subject.

You have indicated that you will be posted to a new location this summer by the Department of National Defence. However, as you are having some difficulties in selling your house, you expect to qualify for benefits from your employer that relate to a Temporary Dual Residence Assistance program. As part of this program, you will receive a reimbursement of the mortgage interest you incur in respect of your previous house.

Mortgage interest is considered to be a taxable benefit that will be included in your income by virtue of paragraph 6(1)(a) and subsection 6(23) of the Income Tax Act (the "Act"). You have asked us whether you can claim the mortgage interest as a moving expense assuming that the mortgage interest is treated as a taxable employment benefit by your employer.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request pursuant to Information Circular 70-6R4. However, we are prepared to provide the following comments.

The general position of the Canada Customs and Revenue Agency on moving expenses is set out in Interpretation Bulletin IT-178R3 (Consolidated) "Moving Expenses", which has been enclosed.

As indicated in paragraph 12(g) of IT-178R3, eligible moving expenses of a taxpayer include interest, property taxes, insurance premiums and heating and utility costs, to a maximum of $5,000, for the old residence during the period that reasonable efforts are being made to sell it, and it is neither rented out nor occupied by the taxpayer or a member of the taxpayer's household. A reimbursement of mortgage interest (or other expense), that otherwise qualifies as a deductible moving expense, does not prevent such a cost from being deductible by the taxpayer provided the reimbursement has been included in the taxpayer's income (See paragraph 2(e) of IT-178R3).

We trust that our comments are of assistance to you.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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