Moving Expenses Tax Deduction in Canada 2025: Eligible Moves, Eligible Costs, and Form T1-M

Moving is one of the most stressful experiences a person can go through — and the costs add up quickly. What many Canadians don't realise is that the Canada Revenue Agency (CRA) allows you to deduct a significant portion of those costs on your tax return, potentially saving you hundreds or even thousands of dollars. The moving expenses tax deduction in Canada is available to workers, self-employed individuals, and students alike, provided certain conditions are met. This guide breaks down exactly who qualifies, what you can deduct in 2025, what the CRA won't allow, and how to file using Form T1-M.

Who Qualifies for the Moving Expenses Deduction?

The moving expenses deduction is governed by Section 62 of the Income Tax Act. To claim it, your move must fall into one of two categories:

• Employment or self-employment: You moved to start working at a new work location as an employee or to run a business at a new location in Canada.
• Full-time post-secondary education: You moved to attend a qualifying educational institution as a full-time student.

In both cases, the move must be from one Canadian location to another — or from outside Canada to a new location inside Canada. Moves to locations outside Canada are not eligible.

The 40-Kilometre Rule

This is the most commonly misunderstood element of the moving expenses deduction. Your new home must be at least 40 kilometres closer to your new place of work or school than your old home was. The CRA measures this using the shortest normal route by road — not a straight-line distance on a map.

For example, if your old home was 55 km from your new job and your new home is 10 km away, the difference is 45 km. You meet the 40 km threshold. However, if the driving distances only differ by 30 km, you do not qualify, even if a straight-line measurement would suggest otherwise. Use Google Maps or a similar route tool to measure the shortest normal driving route before assuming you qualify.

Eligible Moving Expenses in 2025

The CRA maintains a defined list of deductible moving costs. Keeping thorough receipts is essential because the CRA may ask to see them. Here is what qualifies:

Transportation and Storage

• The cost of hiring a moving company to transport household goods and personal effects
• Storage costs for household goods during the move (while in transit or during a gap between homes)
• Packing materials and insurance for items in transit

Travel Costs During the Move

• Vehicle expenses using either the detailed method (actual fuel, oil, insurance, registration, and maintenance costs for the portion of the trip) or the simplified flat-rate method set by the CRA
• Airfare, train, or bus tickets for you and your family members
• Meals during travel — either actual costs with receipts or the CRA simplified meal rate
• Accommodation during the move itself

Temporary Accommodation at the New Location

If your new home is not immediately available, you can deduct up to 15 days of temporary accommodation costs (hotel, short-term rental, etc.) while you wait to move in. Meals during this period do not qualify unless they are part of travel days.

Costs Related to Your Old Home

• Lease cancellation costs: Fees charged by a landlord for breaking a lease early are deductible.
• Vacant home maintenance: If you have moved out and are trying to sell your old home, you can deduct the costs of maintaining it (mortgage interest, property taxes, heat, utilities) up to a maximum of $5,000 CAD. This only applies if the home is vacant and actively listed for sale.
• Real estate commissions: Commissions paid to a real estate agent on the sale of your old home are deductible — but only if you actually sell the home.

Costs Related to Your New Home

• Legal fees: Legal or notarial fees paid when buying a new home at your new location are deductible, provided you sold or are in the process of selling your old home.
• Incidental costs of the new home: This includes costs such as changing your address on legal documents, replacing driver's licences and vehicle permits with provincial equivalents in your new province, and utility connection fees.

What You Cannot Deduct

The CRA is specific about costs that are not eligible. Claiming ineligible expenses risks reassessment and penalties. The following do not qualify:

• Mortgage penalties: If you break a mortgage when selling your old home, that penalty is not deductible.
• Loss on sale of home: If the market has dropped and you sell at a loss, that loss cannot be claimed.
• Home improvements to prepare for sale: Painting, landscaping, or renovations done to make the old home more sellable are personal in nature and not eligible.
• Job-hunting costs: Travel and accommodation expenses incurred while looking for a job before you accept a position are not moving expenses.
• Real estate commissions without a sale: If you rented out your old home rather than selling it, commissions and selling costs are not deductible.

Rules for Students

Full-time students attending a college, university, or other qualifying educational institution can claim the moving expenses deduction under a slightly different framework. Students can deduct eligible moving costs against:

• Scholarships, fellowships, bursaries, and research grants received at the new location

The deduction is limited to the amount of that income earned at or related to the new location. Students cannot offset employment income at an unrelated job with moving expenses the way workers can. If your scholarship income in the year is $8,000 and your moving costs were $10,000, you can deduct $8,000 this year and carry the remaining $2,000 forward to the following year.

The Income Limit and Carry-Forward Rule

For all taxpayers — not just students — the moving expenses deduction is limited to the income you earned at or from the new work location in the year of the move. If your move happened in October and you only earned two months of income at the new location, you can only deduct moving costs up to that two-month income amount.

Any unused moving expenses carry forward automatically to the following tax year and are applied against income earned at the new location. There is no time limit on this carry-forward within reason, but it only applies to the next year — you cannot carry forward indefinitely year after year.

Employer-Paid Moving Allowances

Many employers, particularly in industries such as energy, engineering, and construction, provide relocation allowances or pay moving costs directly on behalf of employees. Here is how this interacts with your tax return:

• Any amount your employer pays toward your move or provides as a moving allowance is a taxable benefit. It will appear in Box 40 or the Other Information section of your T4 slip and is added to your employment income.
• You can still claim your eligible moving expenses as a deduction on your return, regardless of whether the employer paid.
• The net result is often near zero — the taxable benefit and the moving expense deduction largely offset each other — but you must report both correctly.

Failing to report the employer-paid benefit while claiming the deduction is a common error that the CRA may flag on review. At Swift Accounting Calgary, we regularly help clients who have received relocation packages navigate this correctly to avoid unexpected tax bills.

Form T1-M: Moving Expenses Deduction

To claim moving expenses, you must complete CRA Form T1-M, Moving Expenses Deduction. Key points about filing:

• Complete the form in full and attach it to your T1 personal income tax return for the year of the move (or the carry-forward year).
• You do not need to submit receipts with your return, but you must retain all receipts, invoices, and supporting documents for six years from the end of the tax year in which you claimed the deduction. The CRA can request them at any time within that period.
• If you file electronically, keep the T1-M in your records — do not mail it separately.
• The form walks you through each category of expense and calculates your total eligible deduction automatically.

It is important to be accurate and complete on this form. The CRA does audit moving expense claims, particularly when large amounts are involved or when the move is to or from a high-cost city. Organised documentation — lease cancellation letters, real estate closing statements, hotel receipts, mileage logs — will protect your claim if reviewed.

If you moved to or from Calgary and are unsure how to apply these rules to your specific situation, the team at Swift Accounting is available to review your return and ensure you are claiming every dollar you are entitled to. Contact us today to speak with one of our Calgary tax professionals.

Frequently Asked Questions

Can I claim moving expenses if I moved within the same city?

Generally, no. Moving within the same city almost never satisfies the 40-kilometre rule, since both your old and new homes are the same distance from your workplace. The test compares the distances from each home to the new work or school location. If your new job is in the same area as your old one, the distances will be similar and you will not meet the 40 km threshold.

What if I moved for a contract position that ended early — can I still deduct the expenses?

Yes, provided you genuinely moved to start working at the new location and you earned income there. The CRA does not require the employment to continue indefinitely. However, if the CRA believes the move was not genuinely for work purposes — for example, if the contract was very brief and you returned to your old city immediately — it may challenge the claim. Document your employment situation clearly.

Can my spouse or common-law partner claim the deduction if they did not change jobs?

Only the person who moved for work, business, or education purposes can claim the moving expenses deduction. A spouse who relocated purely to accompany their partner cannot independently claim the deduction. The deduction belongs to the taxpayer whose work or study situation triggered the move, though the couple may be able to structure income strategically — something a tax adviser can help with.

Are there any moving expenses I can deduct even if I am renting at both the old and new locations?

Yes. Renters can absolutely claim the moving expenses deduction. Eligible costs for renters include transportation and storage of household goods, travel and meals, temporary accommodation up to 15 days, the cost of breaking a lease at the old rental, and incidental costs at the new location such as transferring utilities. The home-sale-related deductions (real estate commissions, legal fees on purchase, vacant home maintenance) simply do not apply if you were renting rather than owning.