24 February 2010 External T.I. 2009-0348011E5 - 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.

Principal Issues: Whether moving expenses can be carried forward and deducted in years subsequent to the year of the move.

Position: Yes.

Reasons: Effective 1998, moving expenses can be carried forward to future years and deducted against income at the new location subject to the limitations in subsection 62(1).

XXXXXXXXXX 								2009-034801

February 24, 2010

Dear XXXXXXXXXX :

Re: Moving Expenses

We are writing in response to your email dated November 13, 2009, regarding the timing of the moving expenses deduction. It is your understanding that moving expenses can be carried forward and deducted in years following the year of move. However, you note that paragraph 3 of Interpretation Bulletin IT-178R3 (Consolidated), Moving Expenses, indicates that moving expenses can only be carried forward for one year. You have asked us to clarify the issue.

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/formspubs/menu-e.html. 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.

Subsection 62(1) of the Income Tax Act (the "Act") allows a deduction for moving expenses subject to certain conditions and limits. Prior to 1998, subsection 62(1) of the Act provided for only a one-year carryforward of moving expenses. Subsection 62(1) of the Act was amended, effective 1998, to remove this restriction. As a result, where moving expenses paid by a taxpayer in the year of the move exceed the taxpayer's net eligible income earned at the new location, the taxpayer can generally carry forward and deduct the unused part from income earned in the new location in the following years. We note that while the reference to a one-year carryforward period in paragraph 3 of IT-178R3 is outdated, the information sheet to Form T1-M, Moving Expenses Deduction, does reflect the CRA's current position on this issue.

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 and IT-178R3 (Consolidated).

We trust that our comments will be of assistance to you.

Yours truly,

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