Being able to write off moving costs for tax purposes can certainly take some of the pain out of moving day.
To claim an "eligible relocation," the Income Tax Act refers to a "new work location" at least 40 kilometres greater than the old distance be-tween your residence and work.
But how is the parenthetical phrase "new work location" to be interpreted?
That was the question the Tax Court dealt with last month in a case involving an Alberta taxpayer whose $8,500 of moving expenses incurred in 2010 were denied by the Canada Revenue Agency. The employee sold her house in a ham-let north of Edmonton and moved more than 70 kilometres to the city to keep her job with her employer. The taxpayer argued that she made the move because of her new employment responsibilities, despite being with the same employer, at the same physical location.
The judge found a "new work location" has been interpreted in some cases to simply mean a location in Canada where the taxpayer is employed, since there is no actual technical requirement that the location actually be "new."
In fact, in a 2009 case, a judge found that a change from part-time to full-time employment was sufficient to allow a valid moving expense claim despite the fact that taxpayer continued to work for the same employer.
In a more recent case, a taxpayer who felt he needed to be closer to his workplace as a result of new managerial responsibilities was permitted to claim moving expenses.
Yet in other cases, the Tax Court did conclude that there must be a "new work location" for a taxpayer to qualify for the moving expenses deduction. In one case, the taxpayer was denied a moving expense claim because his work location did not change and in another, the judge said that merely moving to a new floor in the same office building to perform new duties, assigned by the same employer, did not constitute a move to a "new work location."
In the current case, the judge reviewed the evidence and determined that since the taxpayer didn't move physical work locations, had no in-crease in salary nor in employment benefits as a result of the move and ultimately even had her working hours reduced for the same pay, there was no valid move for tax purposes.
As the judge concluded, "I do not believe that Parliament's intent was to permit a taxpayer to deduct moving expenses in circumstances where a taxpayer performed new duties with the same employer at the same business location."