Moving?  Let CRA Know to Avoid Benefits Interruption

Evelyn Jacks

Moving before the fall?  You will want to be sure you let CRA know to continue to receive important tax credits to help offset inflation. There’s a form for that; on paper or online.  You will also want to familiarize yourself with the T1M Moving Expense Form to understand the kinds of expense receipts to keep and find come tax time. The deduction can grow to five figures quite easily.  Both forms require some tax knowledge to complete properly.

Form RC325E Address Change Request will help you change your address and phone number; alternatively you can make the request online using My Account.  If you are moving to a rural location outside of a census metropolitan area you will also want to tick the box that results in a higher CAIP payment.  This is particularly important for those who settle in the Maritimes this year, specifically Nova Scotia, Prince Edward Island, and Newfoundland and Labrador whose residents will start paying the federal fuel charge and begin receiving Climate Action Incentive payments in July 2023. 

Other tax credits affected by a move include:

• GST/HST credit payments (federal and provincial),
• Canada child benefit payments (Federal, provincial or territorial payments)
• Canada workers benefit advance payments.

Note that the RC325E form cannot be used to if you haven’t filed a tax return, or to change a name or a date of birth.

The T1M Moving Expense Form is used to claim moving expenses incurred to move to take on a new work or self-employment opportunity or sometimes, to attend a post-secondary school.  To qualify, the taxpayer must earn income at the new location, specifically:

• Salary, wages (including amounts received under the Wage Earner Protection Program Act in respect of work at the new location) or
• Self-employment income.

In addition, the taxpayer must stop working or operating a business at the old location and establish a new home where the taxpayer and family will reside.  Not allowed for the purpose of claiming moving expenses are investment income and employment insurance benefits.   In the case of students, they must either have taxable student award income (fellowships, bursaries) or qualifying income at the new location.

The list of eligible expenditures is extensive and can include big ticket items like the cost of selling the former residence, including real estate commissions, penalties for paying off a mortgage, legal fees, and advertising costs.  Also allowed is the cost of keeping a vacant old residence (to a maximum of $5,000) while actively attempting to sell it, including mortgage interest, property taxes, insurance premiums and utilities such as heat and power.

Further, expenses of purchasing the new home (as long as the old home was owned), including transfer taxes and legal fees, temporary living expenses (meals and lodging) for up to 15 days are possible deductions against other income.

Also claimable are the costs of removal and storage costs, including insurance for household effects, the costs of moving a boat, trailer, or mobile home (to the extent the costs of moving the mobile do not exceed the costs of moving the contents alone), transportation costs and 100% of the cost of meals en route (no 50% restriction).

There are more costs, still, to be considered in this claim, and it goes without saying that these moving expenses are usually audited by the CRA. 

Bottom Line:  Working with a DMA™ - Tax Services Specialist is important to make sure all the required forms and receipts to verify legitimate deductions claimed for moving expenses are in order and retrievable in case CRA comes calling for them.  Given the level of service delays taxpayers and their advisors are currently experiencing, it’s important that tax refunds are not held up or sent to the wrong address.

Evelyn Jacks is President of Knowledge Bureau and best-selling author of 55 books on tax preparation, planning and family wealth management.  Her upcoming book is Tax Talks – Secrets for Getting the Best Tax Breaks at Every Stage of Life.