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Moving Expenses

Overview

When are Moving Expenses NOT considered a taxable benefit?

What does the Canada Revenue Agency (CRA) consider an “Eligible Moving Expense”?

When are Moving Expenses considered a taxable benefit to the employee?

Overview

New faculty and staff may be required to move to the Toronto area from other parts of Canada, or from outside of the country. The reimbursement of “moving expenses” may be part of negotiations to hire the new employee.

Employees responsible for negotiating and/or processing the reimbursement of moving expenses (or other similar payments) should be aware of the required treatment of these payments by the Canada Revenue Agency from the perspective of both the employee and the University. The specific moving expenses reimbursed by the University would be covered in the employment agreement between the employee and the University at the time of the employment offer. The sections below will help to determine whether such moving expenses are considered a taxable benefit or simply a reimburement of expenses.

 

When are Moving Expenses NOT considered a taxable benefit?

Moving expenses meeting ALL the following criteria are not considered a taxable benefit:

and should be processed by the department using an expense reimbursement form ( Excel ; PDF )

If there are any questions regarding a specific situation, please contact the What does the Canada Revenue Agency (CRA) consider an “Eligible Moving Expense”?

The following moving expenses, if negotiated with the employee in advance of employment, and are supported by original receipts, would be considered “eligible” from the point of view of the CRA:

  • travelling costs (including a reasonable amount spent for meals and lodging) while the employee and members of the employee’s household were moving from the old residence to the new residence;
  • the cost to the employee of transporting or storing household effects while moving from the old residence to the new residence;
  • costs to move personal items such as automobiles, boats, or trailers;
  • charges and fees to disconnect telephones, television aerials, water, space heaters, air conditioners, gas barbecues, automatic garage doors, and water heaters;
  • fees to cancel leases;
  • the cost to the employee of selling the old residence (including advertising, notarial or legal fees, real estate commission, and mortgage discharge penalties).
  • charges to connect and install utilities, appliances, and fixtures that existed at the old residence;
  • adjustments and alterations to existing furniture and fixtures to arrange them in the new residence, which include plumbing and electrical changes in the new residence;
  • automobile licences, inspections, and drivers’ permit fees, if the employee owned these items at the former location;
  • legal fees and land transfer tax to buy the new residence;
  • the cost to revise legal documents to reflect the new address
  • reasonable temporary living expenses while waiting to occupy the new, permanent accommodation;
  • long-distance telephone charges that relate to selling the old residence; and
  • amounts you paid or reimbursed for property taxes, heat, hydro, insurance, and grounds maintenance costs to keep up the old residence after the move, when all reasonable efforts to sell it have not been successful.

For a complete list of eligible moving expenses and related issues, refer to the Canada Revenue Agency site on eligible moving expenses, or contact the .

 

When are Moving Expenses considered a taxable benefit to the employee?

All other negotiated payments relating to an employee’s move (i.e. other than eligible moving expenses) must be discussed with the payroll department to ensure the University processes the payment as required under the Income Tax Act as these payments are generally considered taxable benefits to the employee. These payments would include non-accountable allowances (see below) and ineligible moving expenses.

Non-accountable allowances:

A non-accountable allowance is a payment provided to an employee for moving for which the employee does not have to provide a detailed account.

Canada Revenue Agency (CRA) considers a non-accountable allowance for incidental relocation or moving expenses of $650 or less to be a reimbursement of expenses that employees incurred because of the move. Therefore, this type of allowance is not taxable. For CRA to consider it as a reimbursement for incidental expenses, employees have to certify in writing that they incurred expenses for at least the amount of the allowance, up to a maximum of $650.

Examples

  • If the employee receives a non-accountable allowance of $625, and certifies that he or she incurred expenses for the amount of the allowance, the employee will not be taxed on the amount received.
  • If the employee receives a non-accountable allowance of $750, and he or she can certify the expenses, the taxable benefit for the employee would be $100 only, which is the part of the amount is excess of $650.

For more information on non-accountable moving allowances and ineligible moving expenses, please contact the at 416-978-2814.

Last revision April 2011