Claiming Moving Expenses in Canada: The 40km Rule and What Qualifies

Moving is expensive. The good news is that if you moved to start a new job, run a business at a new location, or attend post-secondary school, the CRA may let you deduct a significant portion of your moving costs. The rules are specific but the deduction can be substantial -- often thousands of dollars.

The Basic Requirements

To claim moving expenses under section 62 of the Income Tax Act, you must meet all of these conditions:

1. You moved to a new home in Canada (or from outside Canada to a home in Canada, in certain cases)
2. Your new home is at least 40 kilometres closer to your new place of work or school (measured by the shortest normal route)
3. You moved to earn income at a new work location (employment or self-employment) or to attend a post-secondary institution as a full-time student

That is it. There is no minimum distance for the move itself. The 40km rule is about how much closer your new home is to work, not how far you moved in total.

The 40km Rule Explained

The CRA measures the distance using the shortest normal route available to the travelling public. This means driving distance, not a straight line.

Example: Your old home was 52 km from your new office. Your new home is 8 km from the new office. The difference is 44 km, which exceeds 40 km. You qualify.

Example: You moved across the street from one apartment to another because it was cheaper, and your workplace did not change. The distance difference is zero. You do not qualify.

Important: The 40km test compares the distance from your old home to the new work location versus the distance from your new home to the new work location. Both distances are measured to the same destination (the new workplace).

Who Can Claim

Employees

If you moved to start a new job, a new employment position, or were transferred by your employer, you can claim moving expenses. The key is that the move was to work at a new work location.

Self-Employed Individuals

If you moved to start or operate a business at a new location, you qualify. This includes relocating your freelance practice to a new city.

Students

Full-time students at a post-secondary institution can claim moving expenses to attend school. However, the deduction can only be applied against taxable scholarships, fellowships, bursaries, and research grants -- not against employment income from a summer job (unless they also meet the employment test).

Eligible Moving Expenses

The list of what you can deduct is broader than most people expect.

Transportation and Travel

• Travel costs for you and your household members to the new home (fuel, flights, train, bus)
• Meals during the trip (you can use the CRA's simplified flat rate of $23 per meal, up to 3 meals per person per day, or actual receipts)
• Vehicle costs for driving to the new home (CRA simplified rate per kilometre or actual costs)

Temporary Living Expenses

• Temporary lodging near the old or new home for up to 15 days (hotel, Airbnb)
• Meals during temporary lodging for the same 15-day period

This covers the gap period when you have left your old home but have not yet moved into the new one.

Housing Costs at the Old Residence

• Lease cancellation costs at your old home
• Maintenance costs to keep the old home while it is vacant and listed for sale (up to a reasonable period)
• Interest, property taxes, insurance, and utilities for the old home during a vacant period (if trying to sell)

Housing Costs at the New Residence

• Legal fees for purchasing the new home (only if you sold the old home)
• Land transfer tax on the new home (only if you sold the old home)
• Connection costs for utilities at the new home (phone, electricity, water)

Moving and Storage

• Moving company costs or truck rental
• Packing materials (boxes, tape, moving supplies)
• Storage costs (temporary storage during the move)
• Insurance for your belongings during the move

Other Eligible Costs

• Costs to update your address on legal documents (driver's license in some provinces)
• Costs to revise legal documents to reflect your new address (leases, wills)
• Up to $5,000 in costs to maintain the old residence while you tried to sell it

What You Cannot Claim

• The cost of purchasing a new home (beyond legal fees and land transfer tax as described above)
• Mortgage penalties for breaking a mortgage early
• Home improvements to make the old home sell faster
• Losses on the sale of the old home
• Moving expenses paid or reimbursed by your employer (only claim the unreimbursed portion)
• Furniture and appliance purchases for the new home

The Income Limit

Here is the critical restriction: you can only deduct moving expenses against income earned at the new location.

If you moved in October and earned $25,000 at the new job from October through December, your moving expense deduction is capped at $25,000 for that year. If your moving costs were $30,000, the remaining $5,000 carries forward to the following year and can be deducted against income earned at that location.

For self-employed individuals, this means income from the business at the new location. If you ran the same freelance business at both locations, your income at the new location is the income earned after the move.

How to Claim

You report moving expenses on Form T1-M (Moving Expenses Deduction). The total deduction flows to line 21900 of your tax return.

Steps

1. Calculate total eligible expenses
2. Subtract any employer reimbursements or allowances
3. Complete Form T1-M
4. Cap the deduction at your income from the new location
5. Carry forward any unused amount to the following year

You do not need to attach receipts when filing, but you must keep them for at least six years in case the CRA asks.

Simplified vs Detailed Method

For meals and vehicle expenses during the move, the CRA offers two approaches:

Method	Meals	Vehicle
Simplified	$23 per meal (max 3/day/person)	Province-specific per-km rate
Detailed	Actual receipts	Actual gas, maintenance, insurance

The simplified method requires no receipts for meals and vehicle costs. The detailed method requires receipts for everything.

Tip: Calculate both methods and use whichever gives you the larger deduction.

Common Mistakes

1. Not measuring the 40km correctly. Use the shortest normal driving route, not a straight line. Google Maps or a similar tool works. The CRA does not accept straight-line ("as the crow flies") distance.
2. Claiming against the wrong income. Moving expenses can only offset income earned at the new location. If you earned most of your income at the old location before the move, your deduction for that year is limited.
3. Including employer reimbursements. If your employer paid for part of your move, only claim the portion you paid out of pocket.
4. Forgetting the carry-forward. If your eligible expenses exceed your new-location income, the unused amount carries forward. Do not lose it.
5. Missing the temporary living expenses. The 15-day window for meals and lodging is often overlooked and can add up quickly for a family.

Sources

1. CRA Line 21900 - Moving Expenses
2. CRA Form T1-M - Moving Expenses Deduction
3. CRA Income Tax Folio S1-F3-C4 - Moving Expenses
4. Income Tax Act, Section 62 - Moving Expenses
5. CRA Meal and Vehicle Rates for Moving Expenses