Save Receipts Now: New Mobility Tax Credit

Evelyn Jacks

The 2022 Federal Budget announced that, beginning in 2022, eligible workers will be able to deduct up to $4,000 per year for eligible expenses.  This provision is part of the April 7, 2022 Federal Budget Bill C-19, tabled on April 28.   Are you speaking to your clients about saving their receipts now?  Here are details you need to share:

Eligible taxpayers.  Specifically, eligible workers for the new Mobility Tax Credit include tradespersons and apprentices, who ordinarily reside in Canada and move to a temporary location in Canada who temporarily relocate to obtain or maintain employment in the construction industry.  The relocation must be for a minimum of 36 hours.

Eligible expenses.  These include:

• Temporary lodging at the work site that is at least 150km from their ordinary place of residence
• Transportation for one round trip from their ordinary place of residence to the temporary lodging
• Meals in the course of travel to and from the temporary residence (one round trip)

Carry Overs Possible.  Eligible expenses may be claimed for a period which is:

• In the previous tax year,
• In the current tax year, or
• In January of the following tax year.

Not Eligible.  Expenses may not be claimed if reimbursed or if their ordinary residence is not available for use during the temporary lodging period.   Also, you can’t double up:  expenses may not be claimed under this new provision and the moving expense deduction.

There is a Cap:  This is also important:  the deductible expenses are limited to 50% of the worker’s employment income.  Expenses claimed as moving expenses may not also be claimed under this provision.