requires that the distance between your old residence and your “new work location” be at least 50 miles farther than the distance between your new residence and the new work location.
But while the Canadian statement may sound pretty straightforward, it is not quite so. The CRA wording regarding Line 219 leaves the definition of "new work location" rather ambiguous. According to the agency, deductions may be claimed if "you have moved and established a new home to be employed or carry on a business at a new location," and "your new home [is] at least 40 kilometres (by the shortest usual public route) closer to the new place of work."
In 2007, Mr. Wunderlich, an employee of Boehringer Ingelheim (Canada) Ltd. in Burlington, Ont., received a promotion which led him to believe that he needed to be closer to his work. He consequently moved to Oakville, about 50 kilometers closer to his workplace than his original home.
His deductions were rejected by CRA who claimed that since he was working for the same employer, he did not qualify for the tax deduction. There was, in other words, no "new location" involved in Mr. Wunderlich's case.
The case was taken to court where the presiding judge disagreed with the CRA, and allowed the claim. It was argued that the location as defined in the Tax Act only had to satisfy the condition of being an "eligible location", and "simply a location in Canada". There was in fact no requirement for this to be a "new" location.
Furthermore, unlike in the American model, there appears to be no specification of when the move must occur. Publication 521 clearly states that the move must be effected within a year of commencement of the new job. There is an allowance for extenuating circumstances. For example, if you were offered a job in a new location, but you decided to stay in your old location so that someone in your family could finish high-school, and you didn't actually move your family until 16 months after you started your new job, you can still claim moving expenses.
In the Canadian model, it is only necessary that the move brought the claimant 40 kilometers or more closer to the "new" work venue as compared with the situation before the move. It seems not to matter if the move occurs before the commencement of the new position, a year after, or even much longer than a year after.
The presiding judge in Mr. Wunderlich's case stated, "If a move within one month of commencing such employment enables a person to be employed at that location, then a move within two months of commencing such employment would also enable the person to be employed at that location, as would a move within one year or two years and so on.”
In addition, if the eligible moving expenses were paid in a year after the year of the move, they may be claimed on the return for the year they were paid against employment or self-employment income earned at the "new" work location.
For Americans, here is more information on What Moving Expenses You May Claim on Your Taxes.
