Moving expenses deduction: 40 km closer, capped at new income

Who qualifies for the moving expenses deduction?

Your client qualifies when they moved to a new home to work or run a business at a new location, or to attend a full time post secondary program, and the new home is at least 40 km closer to that new work location or school by the shortest public route canada.ca. The deduction is section 62 of the Income Tax Act, claimed on line 21900 laws-lois.justice.gc.ca.

The CRA's folio says the connection to work, business or school doesn't exist when someone moves solely for personal reasons, but it can exist even with a delay between the move and the start of work canada.ca. There's no fixed time limit in the folio.

Generally the move has to be from one place in Canada to another. A move to or from Canada qualifies only for a factual or deemed resident of Canada moving between places where they normally live canada.ca. Residence questions are on the Canadian tax residency page.

Which moving expenses count under section 62(3)?

Subsection 62(3) lists what counts, and two items carry hard caps: temporary meals and lodging for no more than 15 days, and carrying costs of the vacant old home to the lesser of $5,000 and the actual amount laws-lois.justice.gc.ca.

The CRA's ineligible list catches a lot of claims in practice: house hunting and job hunting trips, repairs to make the old home more saleable, a loss on its sale, mail forwarding, mortgage default insurance, cleaning a rental to meet the landlord's standards, and items the movers refused to take canada.ca.

For meals and the vehicle, your client can use actual costs or the simplified method. For 2025 claims the simplified meal rate is $23 per meal, up to $69 a day per person, and vehicle costs are kilometres times the cents per km rate for the province or territory where the trip began canada.ca. As of October 2026 the CRA hadn't posted 2026 rates. The full table is on the CRA meal allowance rates page.

How much does a Winnipeg to Calgary transfer deduct?

Your client and their spouse move from Winnipeg to Calgary for a new job that starts September 1, 2025. They drive 1,330 km over two days, sell the Winnipeg house and buy in Calgary. The employer paid the $6,400 moving company bill directly, so that cost is out of the claim.

Your client earns $20,000 at the Calgary job from September to December 2025. The 2025 deduction stops at $20,000, and the remaining $29,020.80 minus $20,000 = $9,020.80 carries forward to 2026, deductible against income from the same Calgary job.

Each eligible move gets its own Form T1-M, and line 29 of the form goes on line 21900 of the return canada.ca. The current form on the CRA site is the 2025 version canada.ca. Keep the receipts; don't send them unless the CRA asks.

Why most students get nothing from this deduction

A full time student who moves to school can deduct moving expenses only from scholarships, fellowships, bursaries, certain prizes and research grants that must be included in income canada.ca. The problem is that post secondary scholarships, fellowships and bursaries are generally not taxable for a full time qualifying student canada.ca. With no taxable award income, the deduction has nothing to offset.

The work route is the one that usually pays off. A student who moves for a job, including summer employment, deducts against employment income at the new location, and cooperative students moving back after a work term or summer break can also qualify canada.ca. Unused amounts carry forward against the same type of income, so a student's unclaimed moving costs can sit until taxable income shows up at that location.

A student can move to a school outside Canada as long as the old home or the new home is in Canada, and the CRA's folio treats full time status the same way as the education amount test canada.ca.

What changes when the employer pays for the move?

Amounts an employer paid on your client's behalf aren't deductible, and a reimbursement or allowance either goes into income or reduces the claim laws-lois.justice.gc.ca. The CRA may ask for a letter from the employer confirming what was and wasn't reimbursed canada.ca.

On the payroll side, employer payments for a move to a new work location are generally not taxable, and the CRA's list includes house hunting trips, travel and lodging during the move, moving household goods, and legal fees and land transfer tax on the new home canada.ca. Note the asymmetry: an employer can pay for a house hunting trip tax free, but your client can't deduct one they paid personally.

A non accountable allowance of $650 or less for incidental moving costs is not taxable if the employee certifies in writing that they spent at least that amount; only the excess over $650 is taxable canada.ca. Compensation for a loss on the old home is taxable: for an eligible housing loss, half of the amount over $15,000 is included, otherwise all of it. Taxable amounts go in box 14 and code 40 of the T4. More on that reporting is on the taxable benefits page.

Which edge cases change the claim?

The 40 km is a road measurement. The folio says the distance is measured using the shortest normal route available to the travelling public, following Giannakopoulos, not a straight line on a map canada.ca. Compare old home to new work location against new home to new work location; the difference must be at least 40 km.

Timing. Expenses are deductible only once paid and only after the move has happened. Costs paid in a later year are claimed in the year paid, and moving expenses can't be carried back canada.ca.

Two spouses, one move. Expenses paid by a spouse or common law partner are generally allowed once, and the same expense can't be claimed twice. Where both spouses relocate, each can claim up to $5,000 of carrying costs, but not on the same bills canada.ca.

Selling costs and the home's gain. If your client doesn't use the selling costs on the T1-M, they can reduce the gain on the sale instead, which matters when the house wasn't fully covered by the principal residence exemption canada.ca.