31 August 1995 External T.I. 9518485 - 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:

Whether moving expenses may be claimed in circumstances where the taxpayer chooses to move closer to an existing business at an existing location and after which move no income was received.

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

The law requires that the reason for the move be commence employment or to commence carrying on of the business. Also, since there is no income from the business received after the move, in that year or in the immediately following year, no claim would be permitted.

		951848
XXXXXXXXXX	J.A. Szeszycki

August 31, 1995

Dear XXXXXXXXXX:

Re: Moving Expenses

This is in reply to your letter of July 10, 1995 in which you asked that we review the circumstances surrounding your move from British Columbia to Alberta in 1993 and advise whether a claim for related moving expenses is permitted under the Income Tax Act (the Act).

It is our understanding of the circumstances that while resident in the province of British Columbia you were part owner of a business that operated in Edmonton, Alberta. We also presume from your letter that your ownership interest in that business was intended to provide some level of annual income from the investment. In March of 1993, you moved to Edmonton for the stated purpose of resolving problems related to your investment in the business. The business did not generate any income for you in 1993 following your move, nor in 1994. In fact, there was no further income received from your investment until you disposed of your interest in the business in June of 1995.

Our Comments

Section 62 of the Act provides the authority that permits an individual to claim expenses related to moving from one location to another. It places restrictions on the types of expenses that qualify as moving expenses as well as the circumstances under which a qualifying move takes place. The opening words of subsection 62(1) of the Act read as follows:

"(1) Where a taxpayer has, at any time, commenced to carry on a business or to be employed at a location in Canada (...referred to as "the new work location")... and by reason thereof...."

The wording of the provision reflects a tax policy that is intended to provide relief for those individuals whose relocation is related to the commencement of employment at a new location or starting a business at a new location. It was not intended to provide relief to individuals who choose to move closer to the location where they are presently employed or who wish to move closer to the location where their business carries on its operations.

That same provision of the Act sets the restriction on the timing and total amount that may be claimed as moving expenses. The relevant portion of that provision reads as follows:

"...in computing the taxpayer's income for the taxation year in which the taxpayer moved from the old residence to the new residence or for the immediately following taxation year, there may be deducted amounts paid by the taxpayer as or on account of moving expenses incurred in the course of moving from the old residence to the new residence, to the extent that

...

(f) the total of those amounts does not exceed...the taxpayer's income for the year from the taxpayer's employment at the new work location or from carrying on the new business at the new work location, as the case may be..."

If the income from the employment or business for the year of the move is not sufficient to absorb the moving expenses, the expenses may be claimed to the same extent in the immediately following year. If the income in both those years from the employment or the carrying on of the new business is insufficient to absorb the moving expenses, the remaining expenses are not deductible.

It is our view that, under the circumstances of your case as we understand them, neither one of the above criteria are met and, consequently, a claim for moving expenses would not be permitted under the law.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

c.c. Edmonton Tax Services