11 August 2014 External T.I. 2014-0525511E5 - 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 incurred to relocate closer to a permanent position would qualify for the moving expense deduction for income tax purposes.

Position: It is a question of fact, most likely no.

Reasons: See response.

XXXXXXXXXX
2014-052551 C. Underhill

August 11, 2014

Dear XXXXXXXXXX:

Re: Moving expenses

We are writing in response to your e-mail of March 25, 2014, where you asked whether certain moving expenses would qualify for the moving expense deduction for income tax purposes.

In the situation described, the taxpayer completed a full-time XXXXXXXXXX year employment contract. The contract was renewed for an additional XXXXXXXXXX years. During the second contract, the taxpayer was offered a permanent position for the same job. The taxpayer accepted the permanent position and relocated closer to the employer's work place. The taxpayer's work location, working conditions, and employment duties did not change. The new residence is located at least 40 kilometres closer to the employer's work place than the old residence.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (Act) and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.

Under subsection 62(1) of the Act, subject to certain conditions and limits, a taxpayer may deduct moving expenses incurred in respect of an "eligible relocation". The term "eligible relocation" is defined in subsection 248(1) of the Act and includes a relocation that occurs to enable the taxpayer to carry on a business or to be employed at a new work location. The new residence must be at least 40 kilometers closer to the new work location than the old residence was. It is always a question of fact whether or not a move has been made for such reasons.

Although the Act uses the term "new work location" to designate a place in Canada where the taxpayer has relocated, the courts have generally taken the view that such a place does not necessarily have to be "new". Sometimes, a taxpayer may carry out an eligible relocation without changing his or her employer or work location. This may be the case where the taxpayer relocates to assume new responsibilities related to his or her employment, which the taxpayer would have been unable to assume if it were not for the relocation.

From the information you provided, it appears that the move did not occur to enable the taxpayer to be employed at a new work location for purposes of the moving expense deduction. As such, the taxpayer is likely not entitled to the moving expense deduction under section 62 of the Act.

We trust these comments will be of assistance.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate