1 March 1996 External T.I. 9530145 - MOVING EXPENSES - TWO RELOCATIONS

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 eligible moving expenses related to each of two relocations are deductible under circumstances described.

Position:

Under the circumstances, the eligible expenses related to the first move would likely be deductible with the second being considered not a qualifying move.

Reasons:

The second move would not be considered to have been made by reason of having commenced employment at a new work location.

						March 1, 1996

	Winnipeg Tax Services		HEADQUARTERS
	Client Services			J.A. Szeszycki
(613) 957-8953
	Attention: Susann Ward
						953014

Eligible Moving Expenses

This is in reply to your memorandum of November 14, 1995 in which you requested our views on the deductibility of the moving costs associated with the relocations described below. We apologize for the delay in providing you with this response. Part of the delay can be attributed to a recent review made of the provisions of section 62 of the Income Tax Act as they apply to individuals who relocate in order to look for employment.

You describe a situation in which an individual relocates from Saskatoon, Saskatchewan to Winnipeg, Manitoba in the summer of 1995 in search of employment. He is unable to find employment in Winnipeg but he is successful in finding work in Beausejour, Manitoba, a community that is in excess of 40 kilometres east of Winnipeg. At the present time the taxpayer is commuting from Winnipeg, where he had purchased a home upon his arrival there, to his employment location in Beausejour. It is his intention, and he has taken initial steps, to relocate to Beausejour.

You have asked whether, under the circumstances described, the taxpayer is entitled to claim moving expenses related to his relocation from Saskatoon to Winnipeg and also those related to his eventual move from Winnipeg to Beausejour.

Subsection 62(1) of the Act provides that where a taxpayer commences to be employed at a new work location and moves from one residence to another for that reason he or she is entitled to make a claim in respect of the eligible moving expenses. Such a claim is limited to the extent of income earned at the new location in either the year of the move or the immediately following taxation year.

In our view, from a technical standpoint, the events should be viewed as two distinct qualifying moves. The first move, from Saskatoon to Winnipeg, was made for the purposes of seeking employment. The taxpayer's eligible expense claim in respect of that move would be limited by the amount of employment income earned at this new work location in 1995 (or 1996). In order for Winnipeg to be considered as the taxpayer's new work location he would have to have commenced to be employed at that location in either 1995 or 1996. The second move, from Winnipeg to Beausejour, would also be considered as a qualifying move with related eligible expenses qualifying for a moving expense claim against employment income earned in Beausejour, the new work location, in the year of the move or the immediately following year.

In the alternative, the move to Winnipeg from Saskatoon can be viewed as one where Beausejour is considered as the new work location and Winnipeg as the location of the new residence in respect of that new work location. Consequently, the eligible moving expenses incurred that relate to the move from Saskatoon to Winnipeg could be claimed against income earned at the Beausejour work location in 1995, or if the income in that year is insufficient, in 1996. The subsequent move, however, from Winnipeg to Beausejour, would not be viewed as a qualifying move since the taxpayer will not be considered to have moved by reason of having commenced employment at a new work location but rather to simply move closer to an existing work location.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch