Moving Expenses: When are they deductible for physicians?

Are you a physician who moved in 2022, or are considering a move in 2023?

If so, your moving expenses may be deductible for tax purposes.

Are you eligible to claim moving expenses?

To claim moving expenses, you must meet the following criteria outlined by CRA:

1. One of the following must apply to your situation:

• You are employed or self-employed and moved to work or run a business from a new location.
  • ex) Moving to practice as a resident doctor, postdoctoral fellow, or attending physician

OR

• You are a student and moved to attend a post-secondary school full-time.
  • ex) Moving for medical school

AND

2. Your new home is at least 40 kilometers closer to the new work or school location.

*It is important to note that moving expenses incurred while immigrating into Canada are typically not tax deductible.

However, if you have found yourself on this blog, it is probable that you have some lingering questions regarding this tax deduction, like:

• What can you claim and what receipts should you be keeping?
• Can you still claim expenses if you will receive a reimbursement?
• How much can you deduct on your tax return?

What can you claim and what receipts should you be keeping safe?

Moving expenses are a highly reviewed tax deduction – and as such, it is important that you save all the support you need in the event that CRA requests supporting documentation.

These are some of the receipts/documents that you should avoid tossing in the bin:

• Sold (or selling) your old house, and buying a new one?

The following are claimable expenses:

Old House:

1. Advertising Costs
2. Legal Fees
3. Real Estate Commission

New House:

1. Legal Fees
2. Land Transfer Taxes
3. Title Registration

The above expenses should be explicitly outlined in your legal sale and purchase documents. Be sure to keep copies on hand to provide to your accountant come Tax Season.

• Driving to your new home?
  • Vehicle Expenses (including gas)
    • While you can opt to keep every receipt for moving related vehicle expenses, you may instead claim an amount based on a “simplified” calculation. This simplified calculation is based on a per kilometre rate and allows you to keep track of your odometer instead of logging every gas station receipt.
    • Note – you may still be asked to provide some support for the “simplified” claim, but this is not common.
  • Meal Expenses
    • Like vehicle expenses, you can use a “simplified” calculation for claiming meal expenses incurred while travelling to your new home. Meal expenses are based on a flat rate per person per day.
    • Note – you may still be asked to provide some support for the “simplified” claim, but this is not common.
  •  Hotel Accommodations
    • The cost of temporary accommodations related to your move may be claimable up to a maximum of 15 days.
  •  Moving/Storage Fees
    • Expenses incurred in order to move your household items to your new home, such as packing, hauling, movers, and in-transit storage, are claimable on your personal tax return.

Can you still claim expenses if you will receive a reimbursement for moving expenses?

If you will be reimbursed for your moving expenses, you can only claim a deduction for eligible expenses if:

• The reimbursement will be included in your taxable income. In which case, you are typically able to claim all eligible expenses as normal.

OR

• If the amount will not be included in your taxable income, you must reduce your claim by the amounts that will be reimbursed.

How much can you deduct on your tax return?

There is a limit on the amount of eligible moving expenses that you can claim on your personal tax return in a given year.

Typically, your claim is limited to the income earned from the new 99location, business location or the taxable portion of your scholarships/bursaries/ fellowships/grants received during the tax year, less an adjustment for other tax deductions claimed that relate to the income. This is known as your “net eligible income.”

If your “net eligible income” is insufficient to claim the full amount of moving expenses in one tax year, you can carry forward the unused amount to deduct in a future year.

If you would like a consultation regarding tax for physicians, please contact us below.

 * Content is for informational purposes only and is not intended to be used as professional advice. Each taxpayer’s circumstances are unique. Bokhaut CPA makes no representation as to the accuracy and completeness of the information in this article and will not be liable for any errors or omissions