Boxed in by moving expense claims

National Post


We are just over three weeks away from "Moving Day," the lesser-known July 1 holiday, celebrated only in Quebec, and known as "La fête du déménagement." It's the date on which many leases come up for renewal and can be traced back to a 1973 Civil Code of Quebec amendment that stipulated that unless a landlord and tenant specifically agree otherwise, every 12-month lease must run from July 1 to June 30.

Under the Income Tax Act, you can write off your moving expenses, provided the distance between your old residence and your "new work location" is at least 40 kilometres greater than the distance between your new residence and the new work location.

While the Tax Act does use the term "new work location," prior jurisprudence has found that such a place does not necessarily have to be "new" and that, in some situations, an employee can have an eligible relocation without changing his or her employer or work location. For example, an employee who relocates to assume new job responsibilities which he or she would have been unable to if it were not for the relocation may, in some cases, be able to deduct moving expenses.

A recent tax case released this week involved an appeal by an Ontario taxpayer from a reassessment of his 2012 tax return in which the CRA disallowed his claim for nearly $32,000 of moving expenses.

In May 2012, the taxpayer, an hourly paid CAM programmer, was offered an internal company promotion to become a CAD/CAM Developer, effective June 11, 2012. He accepted this position, which was described in the documentation as a "lateral transfer" in the same department. He continued to report to the same person and "all terms and conditions outlined in the Employment Agreement ... remain unchanged." In fact, the only real differences were that the taxpayer went from an hourly rated to a salaried position and the new role "involved some increased responsibilities."

The taxpayer was still required to report to and work at the same work location, but he believed that "by virtue of his expanded responsibilities, he should move closer to his work location." As a result, on June 1, 2012, he moved his family significantly closer.

While it wasn't disputed that the distance between his old residence and his work location is more than 40 kilometres greater than the distance between his new residence and work location, his place of work remained unchanged.

The Tax Court found that there was no evidence that he would have lost his job or opportunity for a promotion if he didn't move nor that the company required him to move in order to continue working there.

As a result, the judge denied his moving expense claim on the basis that there was no "new" work location, citing an earlier case in which the judge said, "I do not believe that Parliament's intent was to permit a taxpayer to deduct moving expenses in circumstances where a taxpayer performed new duties with the same employer at the same business location."