Can a self-employed worker claim a deduction for moving expenses?

Marcel is an accountant. He has set up a splendid office with a beautiful waiting room in his home. Every year, during tax season, he welcomes his clients from the comfort of his home. However, the desire to move has been itching at him for some time, and this year he wants to take the plunge.

Do you think he will be able to deduct the moving expenses incurred by this adventure? Let's take a closer look.

Moving expenses: eligible for a deduction or not?

If you also operate a business at home and want to move, you are probably wondering if you can claim a deduction for your moving expenses.

Well, in Canada, the answer is yes. In fact, if you are moving a business that you operate from your home and the new location is more than 40 kilometres from your current residence, the costs of moving can be deducted from your net income. Good news!

However, only business expenses related to moving within Canada are eligible, which is not too bad.

Eligible expenses

However, to apply, self-employed workers who work from home must have a home office, like Marcel.

Naturally, not all expenses are eligible.

Examples include the transportation and storage of furniture and travel between the old and new homes. Temporary accommodation, meals and living expenses near the old or new home are also included, along with the cost of cancelling the lease of the old residence and the costs related to its sale.

A worker who moves can also deduct the costs related to the purchase of the new property and the replacement of his or her driver's licence and all the costs of connecting and disconnecting public services, to name a few.

Ineligible expenses

However, as mentioned earlier, not all moving expenses can be deducted from net income. For example, all costs incurred during the search for the home before the move, cleaning or repair costs associated with a rented residence cannot be deducted.

A little more about this deduction

And what if the costs of moving exceed your net income? You will be happy to learn that the unused portion of moving expenses can be carried forward and deducted in future years. Not bad, is it?

Deduct moving expenses and promote the success of your business

If, like Marcel, you run a business from home and you want to move but are afraid that you will have to cover the big moving costs alone, you should know that our dear governments have thought of you.

For more business tax advice, please visit the blog section of our website. And if you would like to benefit from accounting and tax support for your business, contact us today.