As university and college students return home for the summer and settle into
a summer job, they should also remember to keep all their moving receipts
because they may be entitled to claim them as a tax deductible expense.
Under the Income Tax Act, Canadian students can deduct moving costs in two
One scenario is a student who moves more than 40 kilometres from home to
attend post-secondary level education on a full-time basis may deduct moving
expenses, but only against the taxable portion of any scholarships, fellowships,
bursaries, certain prizes and research grants.
The other situation where students can deduct moving expenses is if they move
more than 40 km from their school address to start a job or a business,
including summer employment. The Act specifies the student may only deduct these
expenses from employment (or self-employment) income he or she earns at the new
But what if the student doesn't have enough income for the year to claim all
his moving expenses? No problem -- he can carry forward any unclaimed expense to
a subsequent year, provided there is sufficient income from the relevant source
(scholarships, etc. or employment, as the case may be) to offset the deduction.
The list of eligible moving expenses is quite exhaustive and includes:
travelling expenses, including car, meals, and any accommodation en route as
well as actual moving expenses such as packing, hauling, in-transit storage and
But what about the costs of maintaining the student's vacant apartment during
the summer months? Last month, the Federal Court of Appeal was asked that very
The case involved a McGill architecture student, Lisa Hasan, who rented an
apartment in the McGill ghetto in Montreal in September 2000 under a one-year
lease for $640 a month. She lived there during her academic year.
In her 2001 tax return, Ms. Hasan deducted $2,560 paid in rent from May 2001
to August 2001 on her apartment, in which she kept the belongings she did not
need while living with her father and working in Toronto during those summer
months. She argued the rent was the cost of "storing household effects in the
course of moving from the old residence to the new residence" and therefore was
a qualified moving expense within the words of the Act.
The Canada Revenue Agency disallowed Ms. Hasan's moving expense deduction
maintaining the wording in the Act was meant to permit the deduction of storage
costs "when a taxpayer is moving household effects from the old residence to a
When the case was first heard last summer in the Tax Court, the lower court
judge agreed, concluding to be eligible to claim storage fees as a moving
expense, the amount must have been paid "when a taxpayer physically moves or
changes her residence. That did not happen in this situation."
Taking this statement at face value gives the impression Ms. Hasan did not
move nor change residences -- a bizarre conclusion that would seem to imply any
student who moves home for the summer and then returns to the same residence in
September did not move and thus would be precluded from claiming any moving
Likely what the court meant was the storage fees should be disallowed because
they were not incurred "in the course of moving," which seems to contemplate a
moving of personal effects from the old residence to the new one -- something
that did not occur in Ms. Hasan's situation.
Last month, the Federal Court of Appeal unanimously confirmed the Tax Court's
decision to disallow Ms. Hasan's moving expenses.
Ironically, had Ms. Hasan broken her lease and paid the three-month's-rent
penalty, her lease cancellation cost would have been an eligible moving expense
specifically permitted under the Act.