Almost Canadian

Won't virtually everybody on here be a deemed resident though ? It would appear so from the site's definition of deemed resident, unless of course the move was such that one doesn't have enough qualifying days in Canada in the tax year. Good job I moved in January

JonboyE

You normally become tax resident on the day you land in Canada. The deduction is only allowed if you are deemed tax resident in Canada before you land (for example, a Canadian diplomatic officer that has been serving overseas). The deduction for moving expenses is intended for people moving within Canada for work. It is not intended to assist new immigrants.

Tangram

Or moving more than 50km for work, which is what I did and wa resident for tax before the expenses and relocation were paid. I came on a work permit.

http://www.cra-arc.gc.ca/tax/busines...ing/not-e.html

JonboyE

I believe it is 40Kms. As you state you were tax resident in Canada before and after the move this would make the moving expenses deductible (or not a taxable benefit). I didn't get this from your previous post because you mentioned people moving from outside Canada.

For clarity, see this page. Note the 5th paragraph: Generally, your move must be from one place in Canada to another place in Canada.

Tangram

"Generally" seems to be an important word.

gryphea

If you download the form here, http://www.cra-arc.gc.ca/E/pbg/tf/t1-m/README.html

it states you cannot deduct them unless a student or factual or deemed residence, it provides a tight definition of deemed resisdence, one that certainly doesn't apply to my family.

Gryphea

Tangram

Yeah....still confused. I contacted the Relocation company today who said they would not be reporting any taxable benefit for my relocation to my company.

JonboyE

The relocation company would not report any taxable benefit because you are not their employee, but if they have reimbursed you for your moving costs you can bet your life they have recharged your employer. Your employer should report it - providing a benefit via a third party does not change the nature of the benefit. Maybe they don't understand the distinction between a domestic and a foreign move because reimbursing moving expenses for a domestic move will often not be a taxable benefit.

This is from Sun Life's website. It is not authoritative, but it does put this in plain language:

Here's what's required to be able to deduct your moving costs:

* You are moving to start work at a new location or run a business.
* Your new home is at least 40 kilometres closer to where you will be working than your previous home.
* Both the home you are leaving and the home you are moving to are located in Canada.

If you meet these three conditions, you can usually deduct all the costs of moving - and there are often plenty of them.

Tangram

Just spoke to our accountant who said no it doesn't as the income won't appear on your T4 so I guess a visit to the local Revenue Canada office is required to clarify. I will post back with info once I have it for others reference. Thanks Jon.

JonboyE

Thank you - I will be interested to hear what they say.

This is from their own interpretation bulletin 178 (my highlights):

¶ 1. If an individual changes residences in Canada because of starting to carry on a business or to be employed at a new location, amounts paid for "eligible moving expenses" (see ¶s 12 to 17 below) incurred in moving from the old residence to the new residence may be deducted. However, the move must result in the taxpayer living at least 40 kilometres closer to the new work or business location and the deductibility of such expenses is subject to the limits discussed in ¶s 2 to 4 below. As determined by the Federal Court of Appeal, in the case of Dianne M. Giannakopoulos v. MNR, [1995] 2 CTC 316, 95 DTC 5477, the 40-kilometre distance is measured using the shortest normal route available to the travelling public.

Taxpayers who are absent from Canada, but resident in Canada for tax purposes, should also refer to ¶ 19 below.

Tangram

OK. Contacted Revenue Canada.

Explained the situation as thus :

Relocated from the UK to Canada. A lump sum was sent from my company to the relocation company so that as and when expenses were incurred, the relocation company paid the reimbursement to me directly into my bank account.

RC said that there are three ways it could happen for tax. If the employer shows the amounts on either a T4 or T4A as income then I would need to complete a T1M and attach receipts for my expenses, thereby offsetting the income and effectively cancelling out any liability. If they aren't going to do that, which is the way it sounds like from the email received from the relocation company which stated "We will not be reporting to Company X any taxable benefits for your relocation" then I don't have to worry about it, the matter is basically finished.

I asked if that was above board and ok and RC said yes that is fine; it just depends on what arrangement the company had with the relocation company and by the looks of it they won't be reporting it on either a T4 or T4A but if they did, any liability could be offset with the receipts from expenditure.

Paul

JonboyE

I am stunned. Absolutely stunned. Unless there is something in your circumstances that I still don't get this seems to completely at odds with everything I know and have read. It's not the first time I've been wrong, but if it holds up there might be a few (OK, several thousand) amended tax returns for the CRA to deal with soon.

gryphea

I am stunned too I think. Obviously your situation is slightly different due to this relocation company being involved. I will try and call them tomorrow evening (UK time) and present them with our scenario!!!

Good news for you anyway tangram!!


Gryph

Tangram

Let me know how you get on.

Not sure having the Relocation company in the middle makes any difference ( could be a red herring ) at all according to RC it is just the way the employer reports it. But as RC said, either way it's either not reported or it's reported and you can offset it.

Not sure my circumstances are any different. I came to Canada, I incurred moving expenses, I claimed them back, they were paid to me.

Paul

JonboyE

Stunned of White Rock back again.

Section 62 of the Income Tax Act opens with:

62. (1) There may be deducted in computing a taxpayer’s income for a taxation year amounts paid by the taxpayer as or on account of moving expenses incurred in respect of an eligible relocation,

Section 248 (1) defines an eligible relocation as (my bolding):

"eligible relocation" means a relocation of a taxpayer where
(a) the relocation occurs to enable the taxpayer
(i) to carry on a business or to be employed at a location in Canada (in section 62 and this subsection referred to as “the new work location”), or
(ii) to be a student in full-time attendance enrolled in a program at a post-secondary level at a location of a university, college or other educational institution (in section 62 and in this subsection referred to as “the new work location”),
(b) both the residence at which the taxpayer ordinarily resided before the relocation (in section 62 and this subsection referred to as “the old residence”) and the residence at which the taxpayer ordinarily resided after the relocation (in section 62 and this subsection referred to as “the new residence”) are in Canada, and
(c) the distance between the old residence and the new work location is not less than 40 kilometres greater than the distance between the new residence and the new work location
except that, in applying subsections 6(19) to (23) and section 62 in respect of a relocation of a taxpayer who is absent from but resident in Canada, this definition shall be read without reference to the words “in Canada” in subparagraph (a)(i), and without reference to paragraph (b);


So, unless Tangram was tax resident in Canada BEFORE his move the advice from the CRA doesn't seem to stack up with the ITA.