School checklist: books, laptop, receipts: Full-time students can write off moving expenses
As university and college students start shipping their back-to-school gear,
remind them to keep their receipts for moving and travel expenses: they may be
The Income Tax Act permits a full-time student to write off moving costs if
the post-secondary school is more than 40 kilometres from home. It also permits
a deduction for moving costs if the student moves from school to commence
employment -- including a summer job.
Before getting too excited, keep in mind that these costs can only be
deducted against employment income or against the taxable portion of any
scholarships, fellowships, bursaries and research grants.
Given that the federal budget this past spring proposed to exempt all
scholarship and bursary income from taxation, the moving-expense deduction will
only be relevant for students who earn employment income from a part-time job,
summer employment or taxable research grants.
If the student's income from employment in 2006 isn't high enough to write
off all moving expenses, unclaimed costs may be carried forward and deducted in
the following year.
The list of eligible moving expenses is extensive and includes not only
actual moving expenses such as packing, hauling, storage and insurance, but also
any car expenses, meals and accommodations expenses en route.
An interesting tax case decided last year may expand this list by including
the cost of rent on a vacant apartment used for storage during the move.
Danni McKenzie, a single mother of twins, moved from Lethbridge, Alta. to
attend a training program in Calgary between September and December in 2003. She
moved, along with her twins, to a shared townhouse in Calgary for the duration
of her studies.
While living and paying room and board in Calgary, she continued to pay rent
on her vacant Lethbridge apartment, roughly $2,000. She also kept all of her
furniture there. In December, she returned to that apartment.
The Canada Revenue Agency disallowed her claim and concluded that the moving
expenses were "personal expenditures" and not tax deductible. The judge found
that enrolling her children in school in Calgary constituted a "change of
residence for her entire family unit ... Their return to Lethbridge is a second
change of residence."
The judge concluded that the $2,000 in rent she paid to keep her apartment
was "specifically claimable as a cost of storage incurred in moving from the old
residence to the new residence."
Readers should note that this case seems to contradict another 2005 tax case
in which a McGill student who maintained an empty apartment in Montreal over the
summer between semesters was ineligible to write off the rent on her apartment
as a moving expenses.
Different facts sometimes yield different results.