Relocating for work, a new business, or school can be expensive, but the Canada Revenue Agency allows eligible Canadians to deduct many of those costs on their personal tax return. The moving expenses deduction reduces your taxable income dollar-for-dollar, which makes it one of the more valuable deductions available to individuals. This guide covers who qualifies, the 40 km rule, what you can and cannot claim, how to calculate your deduction, and how to complete Form T1-M.
You can claim moving expenses if you are a Canadian resident who moved to a new home in Canada to start a new job, to carry on a business at a new location, or to attend full-time post-secondary education at a college or university. The deduction is available to employees, self-employed individuals, and students alike.
All three groups share the same core requirement: you must have actually moved — your new home must be in Canada, and the move must connect directly to the new work location or school. A move for personal reasons, such as wanting a larger home or being closer to family, does not qualify.
Students attending full-time post-secondary education can claim moving expenses, but their deduction is limited to scholarship, fellowship, or bursary income that is included in their income for the year. If the scholarship is entirely exempt, there is no eligible income to offset, so the deduction produces no benefit for that year — though it can be carried forward.
The single most important test for the moving expenses deduction is the 40 km rule. Your new home must be at least 40 km closer to your new work location or school than your old home was. The distance is measured by the shortest normal route by road, not by straight line.
The calculation compares two distances:
If the difference is 40 km or more, you meet the test. Two examples make this concrete:
Example 1 — Does not qualify: Your old home was 15 km from your new workplace. Your new home is 5 km from that same workplace. Your new home is 10 km closer than your old home was. Because 10 km is less than 40 km, the deduction is not allowed.
Example 2 — Qualifies: Your old home was 55 km from your new workplace. Your new home is 5 km away. Your new home is 50 km closer. Because 50 km exceeds 40 km, you pass the test and can proceed to claim eligible expenses.
The CRA measures distance by the shortest normal route, meaning the most practical road route a person would ordinarily travel, not a straight line on a map. If your commute involves a ferry or a bridge with no practical road alternative, the CRA uses that route. When borderline situations arise — where you are close to the 40 km threshold — it is worth mapping the actual driving route carefully before filing.
The Income Tax Act sets out specific categories of eligible moving expenses. Understanding what is and is not included prevents overclaiming and potential reassessment.
The cost of physically moving your belongings from your old home to your new home is deductible. This includes hiring professional movers, renting a moving truck, renting a trailer, packing materials, and storage costs if you needed to store your household effects in transit. Storage fees are deductible only for the period between leaving your old home and arriving at your new one.
You can deduct the reasonable cost of travelling from your old home to your new home for yourself and members of your household. This includes gas, meals, and hotel stays along the route. The CRA expects costs to be reasonable — you do not need to take the cheapest possible route, but extravagant detours would not be accepted. Meals can be claimed using either actual receipts or the simplified flat-rate method.
Hotel costs and meal expenses for temporary lodging near your old home or your new home are deductible for up to 15 days in total. This covers the gap period when you have left one residence but have not yet settled into the other. Keep itemised hotel receipts and meal receipts for this period.
If you were a tenant and could not avoid paying rent at your old home while also paying at your new location, the overlapping cost is deductible. Any lease cancellation fee you paid to exit a fixed-term lease early also qualifies.
If you owned your old home, the real estate commissions and legal fees you paid to sell it are deductible. This is often one of the largest line items on a T1-M and can significantly increase the total deduction.
If you sold your old home and bought a new one at the new location, the legal fees and land transfer taxes you paid to acquire the new home are also eligible. Note that this applies only when you sold your old home — if you kept it, you cannot claim the buying costs for the new property.
If you moved but were unable to sell your old home right away, you can deduct the carrying costs — mortgage interest, property taxes, insurance, and heat — up to a combined maximum of $5,000. This deduction applies only while you were actively trying to sell the property and no longer living in it.
The fees charged by utility companies to connect services at your new home or disconnect them at your old home are deductible.
Several common costs cannot be claimed despite feeling like genuine moving expenses:
Your moving expenses can only be deducted against income earned at the new location. For employees and self-employed individuals, that means employment or business income earned after the move from the new work location. For students, it means scholarship or research grant income included in their return.
If your eligible moving expenses exceed your income at the new location in the year of the move, you do not lose the excess. The unused portion carries forward to the following tax year, where it can be applied against income earned at the same new location.
To claim, complete Form T1-M, Moving Expenses Deduction, and enter the result on line 21900 of your T1 return. Keep all receipts, contracts, and invoices — the CRA may request them if your return is reviewed. You do not submit the receipts with your return, but you must be able to produce them on request.
Many employers cover some or all of an employee's moving costs. If your employer reimburses you for eligible moving expenses, you must reduce your T1-M claim by the amount reimbursed. You cannot claim what you were already paid back for.
If your employer includes a moving allowance in your income on your T4, the situation changes: because you have already been taxed on the allowance, you can still claim the actual eligible expenses you paid, even if the allowance covered some of them. Some moving allowances are also non-taxable up to certain limits under CRA administrative policies — your employer's payroll department should be able to clarify how any allowance was reported.
The interaction between employer reimbursements, T4 inclusions, and the T1-M can get complicated quickly. The team at Swift Accounting Calgary regularly helps clients sort through these scenarios to ensure the claim is accurate and maximised.
While the rules are well-defined, the details matter. A missed eligible expense, an incorrect distance measurement, or confusion about the income-earned-at-new-location limit can result in either an underclaim or a reassessment. If you moved during 2025 and are unsure whether your situation qualifies, or you want help completing Form T1-M correctly, the accountants at Swift Accounting are available to review your circumstances and file your return with confidence.
Book a consultation through our contact page and bring your receipts, your employer's reimbursement details if applicable, and the addresses of your old and new homes. We will confirm whether you meet the 40 km threshold, identify every eligible expense in your situation, and handle the filing.
Possibly, but it is unlikely. The 40 km rule requires that your new home be at least 40 km closer to your new work location than your old home was. Within most cities, the distance difference between two addresses and a single workplace is rarely 40 km or more. If your new home and old home are both in the same metropolitan area and reasonably close to the workplace, you almost certainly will not meet the threshold. The deduction is primarily designed for people who relocated to a different city or region.
You can only claim expenses that you personally paid and were not reimbursed for. If your employer reimbursed specific eligible expenses, you must subtract those amounts from your T1-M claim. However, if your employer included a moving allowance in your taxable income on your T4, you are permitted to claim the actual eligible expenses you incurred — even if those expenses overlap with the allowance — because you have already been taxed on the allowance amount.
The excess is not lost. You carry it forward to the next tax year and deduct it against income earned at the same new location in that year. There is no time limit specified, but the carryforward must continue to be connected to income at the original new work location or school. Keep your T1-M records and carryforward amounts organised across years so nothing is missed when you file.
The moving expenses deduction under the Income Tax Act applies to moves where both the old home and the new home are in Canada. If you moved to Canada from abroad, your old home was outside Canada, which means the deduction is generally not available for that particular move. However, if you subsequently move within Canada to a new work location and meet all the standard requirements — including the 40 km rule — you can claim eligible expenses for that domestic move in the normal way.
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