22 June 1994 External T.I. 9415195 - DELAY IN MOVING AFTER JOB RELOCATION

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:

timing of the deduction for moving expenses

Position TAKEN:

moving expenses allowed in year of move but the year of move is a question of fact

Reasons FOR POSITION TAKEN:

the preamble to 62(1) clearly restricts moving expenses to the year of the move and the following year -it is likely that the difficulty in this situation arises from determining the year in which the move took place

A. Humenuk

XXXXXXXXXX		941519

Attention: XXXXXXXXXX

June 22, 1994

Dear Sirs:

Re: Moving Expenses

We are replying to your letter of June 10, 1994 in which you ask for clarification as to when a particular taxpayer can claim his moving expenses incurred as a result of a job relocation. Reference is also made to our telephone conversation of June 13, 1994 (XXXXXXXXXX/Humenuk).

In the situation you describe, a taxpayer was required to change work locations in February 1992. The taxpayer listed his house for sale but because of market conditions, he was unable to sell it until June 1994 (with a closing date in September 1994). You advised us that the taxpayer was actively trying to sell the property throughout this period of time. During the period of February 1992 to September 1994, the taxpayer rented an apartment at the new location while his wife and children remained behind at the former location. You wish to know when the taxpayer can claim moving expenses and whether there is a time frame during which the expenses must be incurred in order for the expenses to be eligible for the deduction under section 62 of the Income Tax Act.

Our response assumes that all the other conditions described in section 62 are met with respect to the taxpayer's claim. As stated in paragraph 3 of Interpretation Bulletin IT-178R3 "Moving Expenses", eligible moving expenses are claimed first in the year of the move to the extent of the income earned at the new location. Any eligible expenses not deducted in the first year can be carried forward for a maximum of one year but are only deductible in that following year to the extent of income earned at the new location during that taxation year. If eligible moving expenses are incurred in a subsequent year, the taxpayer may request an adjustment to the return for the year in which the move occurred.

It is a question of fact as to when a taxpayer has moved from one location at which he ordinarily resides to another location at which, after the move, he ordinarily resides. Some of the factors to be considered include whether his family has moved with him, the nature and term of the new employment, his intentions, a change of driver's license and motor vehicle registration (where moving to another province) and so on. However, the fact that the taxpayer has leased rather than purchased his accommodation at the new location would have little significance in such a determination. The decision to rent or purchase accommodation is more of an investment decision than an indication that the taxpayer intends to settle at that particular location.

Your description of the two year hiatus during which the family was separated because of the difficulties in selling the former home would appear to suggest that the leased accommodation was not the taxpayer's ordinary place of residence prior to time when his family joined him. Provided this is the case, the taxpayer would be considered to have moved in 1994 when the leased accommodation became his ordinary place of residence.

In our telephone conversation (XXXXXXXXXX\Humenuk), you also asked whether the taxpayer would be entitled to deduct the cost of meals and lodging for his family for 15 days. While the cost of meals and lodging for up to 15 days is an eligible expense under paragraph 62(3)(c) of the Act, meals and lodging are only deductible to the extent that the family members are unable to occupy either the new or the old residence. If the family moves directly from the old residence into the new residence (whether the new residence is the rental unit already occupied by the taxpayer or a different one), no deduction would be available for the cost of meals and lodging.

The issue was also raised as to whether the taxpayer would be entitled to claim any moving expenses at all since the actual move occurs two years after the change in work locations. While there is no timeframe during which a move must occur in order for the expenses to be deductible, there must be a causal relationship between the change in work locations and the change in the individual's place of residence. It is our opinion that the greater the length of time that separates an employee's change in work locations and the employee's move, the less likely it will be that the employee's move arises as a result of that change. However, it is always a question of fact as to whether an employee's move arises as a result of a change in work locations and in the situation you describe, there does not seem to be any reason to doubt the existance of a causal relationship between the change in work location and the move to the new residence.

While we trust that our comments are of assistance to you, we would caution that they do not constitute an advance income tax ruling and are, accordingly, not binding upon the Department with respect to any particular transaction.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

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