The Canada Revenue Agency offers tax deductions for moving expenses. Usually, these deductions are reserved for people who’ve moved to start a new job, but full-time students may also be able to claim this credit. Here’s what you need to know to advise your clients.
To claim this credit, your client must be a full-time student in a post-secondary school. At a minimum, they need to be enrolled in at least 60% of the usual course load for their program. After the move, your client must be at least 40 kilometres closer to their school. For instance, if they live 80 kilometres from their school and move to an apartment that’s only 5 kilometres away, they qualify. In contrast, if they live 20 kilometres from school and move next door to the school, they unfortunately cannot claim this credit.
How Does the Credit Work?
Full-time students may be able to claim this deduction for every time they move for school. For instance, say your client moves in January to start the winter semester at university. Then, they move somewhere else for the summer and return to the school in the fall. In this situation, they may be able to claim the expenses for multiple moves.
But regardless of how many times they move, they can only claim the deduction against their student-related income. That includes scholarships, fellowships, bursaries, and grants they’re required to report as income. If your clients don’t have this type of income, they can’t claim the student deduction for moving expenses. Similarly, parents can’t claim moving expenses if they help their children move to college.
What if the Student Works?
If the student works and the move puts them closer to their job, they may be able to claim these expenses against their employment or self-employment income. To continue with the above example, if that student moved for a summer job, they might be able to claim expenses against that income. But again, eligibility varies based on the distance involved.
Which Expenses Are Eligible?
Your clients can claim moving costs related to hiring movers and renting moving trucks. They can also claim storage costs, moving insurance fees, travel expenses, and up to 15 days of temporary living expenses while they’re between homes. On top of that, your client can also claim costs related to cancelling leases, maintaining a vacant home they can’t sell, and even real estate commission fees. But they can’t claim expenses related to fixing up their home to sell or cleaning their rental before moving out.
In terms of travel expenses, your client can claim the exact amount they spent on petrol, parking fees, and related costs plus any reasonable expenses they incurred on meals during the move. But it’s usually easier to claim the simplified deductions for both travel and meals. As of 2017, the deduction for meals is $17 per meal, up to $51 per day. For vehicle expenses, multiply the number of kilometres driven by the rate in that province. For example, Alberta’s rate is 45 cents per kilometre, while the rate in the Northwest Territories is 59.5 cents.
How to Claim This Deduction
To calculate your client’s deduction, complete Form T1-M. Then, transfer the value of the deduction to line 219 of their federal income tax return. If their deduction exceeds their income, you can roll these expenses onto their tax return in the following year. But again, you can only claim this deduction against qualifying student income as explained above.
Being a student can be expensive. The CRA recognizes that fact and offers a lot of credits and deductions designed just for students. To help your clients save, you may want to stay educated about these programs so you can inform your clients.