If you move to start a new job, don't assume that your moving expenses will be tax deductible.
Under the tax rules, to be entitled to deduct moving expenses, the distance between your old residence and your new work location must be 40 kilometres greater than the distance between your new residence and the new work location.
While this rule may seem straightforward, it has been the subject of some dispute between taxpayers and the Canada Revenue Agency as to how the 40 kilometres is measured.
In the most recent case decided earlier this month, the issue wasn't how the distance was to be measured, but where Lisa Moreland, an employee of the Royal Canadian Mounted Police since 2005, was actually employed at a "new work location" for purposes of the moving deduction.
Prior to February 2007, Ms. Moreland worked at an office complex at 255 Attwell Drive in Etobicoke, Ont. In February 2007, she was assigned new employment duties, which she still performed at the same location, but in a different area within it.
In June 2007, she moved from Cambridge, Ont. to Milton, Ont., which was indeed 40 kilometres closer to work. She testified that she made the change of residence "for the sole purpose of being closer to [work] and, consequently, of shortening her commuting time."
In filing her 2007 tax return for the year of the move, she claimed $26,000 in moving expenses, which the CRA denied. The tax agency claimed that since Ms. Moreland did not have a "new work location," within the meaning of the Income Tax Act, she was not entitled to deduct any of her moving expenses.
Ms. Moreland disagreed, claiming that she moved from the old residence to the new residence to enable herself to be employed at a "new work location." She argued she "changed physical locations [offices] of work to start a new job within the same office complex at 255 Attwell Drive, Etobicoke."
The Tax Court judge, citing an earlier case, said there are four separate elements required to claim a moving expense: an old work location, a new work location, old and new residences and the comparison of two distances -- the 40 kilometre test.
The judge concluded that Ms. Moreland did indeed change physical work locations -- she moved offices -- to perform her new duties, even though she was assigned by the same employer. But, since she moved within the same office complex -- 255 Attwell Drive--this did not constitute a "new work location."
In denying Ms. Moreland's expenses, the judge explained: "I cannot imagine that Parliament's intent was to permit a taxpayer who goes from a job on the seventh floor of a building to a new job [with the same employer] on the sixth floor of the same building to deduct moving expenses."