Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts

Wednesday, March 26, 2008

Moving Expenses can be CRA Tax deductible

When you make a move in Canada you are sometimes allowed to deduct your moving expenses. This of course is depending upon your circumstances. This page will outline the situations where you may be able to deduct your moving expenses

Tax deductible Moving expenses

Maybe you have you recently moved to a new location? Did you know that you can often deduct certain moving expenses on your next Canadian Federal income tax return, including the costs of transportation, packing and storage costs.

Many people never realize these tax benefits because they don't know what can be deducted. If you are preparing to move, it's best to be informed beforehand so you know which receipts to keep.

You may find it worthwhile during a move to pay for various services that are tax-deductible rather than doing them yourself.

The typical move involves a number of costs including hiring a company to transport personal effects and furniture, hotel stays and meals (if the move involves driving a long distance to a new home), and service fees to disconnect and reconnect utilities. In addition, renters who leave on short notice may have to pay the cost of breaking a lease.

Homeowners will incur closing costs and commissions on the sale of their home as well as legal and other fees on the purchase of their new home. This article will enrich your information about some tax deductible moving expenses.

To be able to claim moving expenses on your Canadian Federal income tax return, your move has to meet the following conditions:

  • You moved to your new home or new apartment to start a job or a business, or to attend full-time post-secondary courses at a university, college or other educational institution.
  • Your new place of residence is at least 40 km closer to your workplace or school than your previous home.
  • You moved from one place in Canada to another place in Canada.

There are two groups are eligible to deduct a portion of their moving expenses: students moving away from home to attend school and people moving to a new area for a job or relocation by their employer.

There has been a challenge to the rules regarding eligibility for the self-employed as you'll read later in this article.

How the law applies to Students

Students must fulfill two main qualifications: the distance between your home and school must be at least 40km (by the shortest public route) and you must be a full-time student. A full-time student is defined as someone who regularly attends a college, university, or other educational institution in a program at a post-secondary school level (whether in Canada or not) and is taking at least 60% of the usual course load during each semester.

As a student, you can only deduct eligible moving expenses from award income (scholarships, fellowships, bursaries, prizes, and research grants) that you report on your return. Your moving expenses must be greater than your award in order to deduct any moving expenses. As Revenue Canada's website reads, "If your moving expenses are more than the award income you report for the year, you can deduct the unused portion of those expenses from the award."

Although many students will not earn award income and will therefore not be able to deduct moving expenses, tuition fees themselves are a tax deduction. If a student has a part-time job, tuition can reduce taxes paid on those earnings.

Students who meet the qualifications and have received award income can deduct the costs of travel, shipping and transportation of belongings, as well as items listed below under 'Expenses you can deduct'.

How CRA applies the law to Employees

If you are moving for work (e.g. a company relocation or new job), are employed and establish a home at least 40 km closer to a new job than your old home, then you qualify to deduct moving expenses. Similarly, if you are self-employed, and you establish a home at least 40km closer to your new operational business than your old home, you also qualify to deduct moving expenses.

According to Revenue Canada, you must establish your new home as the place where you and members of your household ordinarily reside. For example, you have established a new home if you have sold or rented (or advertised for sale or rent) your old home.

Employed and Working from Home: an Exception to the Rule

Until recently, employees who work from home and move have faced some restrictions regarding moving expenses. In the court decision Gary Adamson v. the Queen, Mr. Adamson had incurred moving expenses as an employee who was required to provide his own office in his home.

List of typical Personal expenses you can deduct:

  1. transportation and storage costs (such as packing, hauling, in-transit storage, and insurance) for household effects, including items such as boats and trailers;
  2. traveling expenses, including vehicle expenses, meals, and accommodation, to move you and members of your household to your new residence (you can choose to claim vehicle and meal expenses using the simplified method);
  3. costs for up to 15 days for meals and temporary accommodation near either residence for you and the members of your household (you can choose to claim meal expenses using the simplified method; and
  4. the cost of cancelling a lease for your old residence, except any rental payment for the period during which you occupied the residence.

When your old residence is sold as a result of your move, eligible moving expenses also include:

  • legal or notaries fees for the purchase of the new residence, as well as any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse or common-law partner sold the old residence, and
  • the cost of selling your old residence, including advertising, notarial or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity.

This is a list of the typical Expenses that are not deductible:

  • expenses for work done to make your home more saleable;
  • any loss from the sale of your home;
  • expenses for house-hunting trips before you move;
  • the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products;
  • expenses for job hunting in another city (such as traveling expenses);
  • expenses to clean or repair a rented residence to meet the landlord's standards;
  • expenses to replace personal-use items such as tool sheds, firewood, drapes, and carpets;
  • mail-forwarding costs (such as with Canada Post);
  • costs of transformers or adaptors for household appliances; and
  • costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved.

Don't forget to keep recipient and documents supporting your claims, you do not have to include those document in you tax claim but Canada Revenue Agency may want to see them at a later date.

The tax laws are frequently modified, we recommend that you visit the Canada Revenue Agency's website for specific details about which moving expenses you can claim or consult a professional accountant to maximize your tax return. Please not that this article is for information only, you must contact your accountant or CRA to confirm that all of the above information is still applicable in your area and/or province.

Thank you and enjoy!


Good luck! Remember - many of your moving expenses can be tax deductible, so hang on to your receipts. Call CCRA Revenue Canada or visit their online site here which is an excellent resource for all the necessary tax forms! The "T1-M Moving Expenses Deduction" can be found here - form outlines who can use and claim the expenses and shows details and information on using the form.

More Moving Tips from RE/MAX

Read more about:Homes for Sale

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987

( BUS 905-828-3434
8 Website :

Homes for Sale

Thursday, March 20, 2008

More Canadian Tax Planning Tips

Tax Planning Tips

A Bigger Tax Refund is Yours for the Asking

No matter your age or income level, there are steps you can take to reduce the taxes you pay. It may be a matter of claiming all of the credits and deductions you are entitled to. Or it may involve splitting income with your spouse to reduce your family's total tax burden.

Under Canada's graduated tax system, the more you earn, the higher your tax rate. The rate of tax you pay on the last dollar you earn is known as your marginal tax rate (your tax bracket). It's an important concept because it tells you how much you would save by reducing your taxable income. For instance, if your marginal tax rate is 25% and you contributed $1,000 to your RRSP, you would save $250 in taxes.

Ready to get started? Explore the links below for some timely reminders to help you generate tax savings this year, as well as information on longer-term strategies.

Reduce Your Taxes Now: Maximize Your Credits and Deductions

Here are some tips to help you take advantage of available tax credits and deductions when filing your next tax return. For a more comprehensive list of credits and deductions, or specific strategies related to your situation, consult a financial or tax advisor. Not that details on credits and deductions may change from year to year. Visit the Canada Revenue Agency (CRA) website for specific amounts.

Claim all your credits
Tax credits reduce your taxes directly — a $100 credit reduces your taxes payable by $100. Deductions, on the other hand, reduce your taxable income — the higher your marginal tax rate, the more a deduction is worth to you.

Medical expenses
The medical expense tax credit is one of the most under-used tax breaks. It's available on medical expenses that exceed a prescribed amount or a certain percentage, whichever is less. Provincial tax credits also apply, but will vary according to the province of residence.

Education expenses
Post-secondary students are eligible for education and tuition tax credits. Visit the CRA Website for details. Provincial tax credits also apply, but will vary according to province of residence.

Charitable donations
Charitable giving is a great way to support the causes you care about and help your community. Your donations are eligible for a federal tax credit that increases once donations exceed $200 for the year. As with medical expenses, married or common-law couples can pool their donations to generate even greater savings.

Age and pension credits
All taxpayers over age 65 can claim the age credit but the credit available will depend on your income. You are also entitled to claim a non-refundable tax credit on up to $2,000 of qualified pension income, which includes payments from registered or pension plans but does not include CPP or QPP benefits.

Take your deductions

Think back over the past year. Are there new or one-time expenses you can deduct? You're probably most familiar with the tax deduction for your Registered Retirement Savings Plan (RRSP) contribution, but there are many others you can use to reduce your taxable income.

Moving expenses
If you moved at least 40 km to take a new job or to attend a post-secondary institution full time, you are allowed to deduct certain moving expenses. These include van rentals, the costs of hiring movers, furniture storage, and legal fees and real estate commissions involved in selling your home, among others. The amount is deductible only from income earned at the new job location or from a scholarship or research grant income.

Childcare expenses
The costs of raising a child — including daycare expenses and boarding school fees — can be deducted when both spouses are working or going to school full time. Generally, the lower-income spouse must use the deductions.

Deductions for the self-employed
If you run a home-based business, there are numerous deductions available to you. Let's say your home office takes up 25% of your total floor space. You can deduct 25% of your utilities, home insurance, mortgage interest, and maintenance costs, for example. Expenses directly related to the business, such as supplies and your business phone line, are also deductible. It's a good idea to speak to your accountant or tax advisor, and to keep accurate records.

Act Now to Save on Next Year's Taxes: Use Your Refund Wisely

You've taken advantage of available tax credits and deductions and are expecting a refund. Although it may be tempting to spend your tax refund right away, carefully reinvesting that money can generate even greater tax savings - and investment growth - for you and your family. Here are some ideas to consider:

Maximize RRSP contributions
Your RRSP remains one of your most powerful tax breaks. Not only do you receive a deduction for the contribution you make, the earnings in your plan compound tax-free. Contributing your refund to your RRSP will allow you to capitalize on up to a year's worth of investment growth. To get the most out of your RRSP on an ongoing basis, consider "paying yourself first" by setting up a regular investment plan. This will help you maximize your refund for next year.

Set up and contribute to an RESP
Saving for a child's education? If so, consider using your tax refund to set up a Registered Education Savings Plan (RESP). Although there's no immediate tax deduction, the money in the plan compounds tax-free. When the funds are withdrawn to cover education costs, they're taxable in your child's hands, not yours.

Pay down debt
If you took out an RRSP catch-up loan, consider using your tax refund to pay back the loan. This will reduce your interest costs and free up cash.

Make Tax Savings a Year-round Priority

Once you've wrapped up this year's taxes and put your refund to good use, you can start planning to reduce your taxes for next year and beyond. Here are some planning strategies to consider. You financial advisor can help you get the most out of these strategies.

Income-splitting opportunities
Because of Canada's graduated tax system, the more you earn, the higher your tax rate. If you are married or living common-law and one spouse earns more than the other, splitting income can reduce your family's overall tax bill.

Saving and investing
When both spouses are working, the higher-income earner should pay the bills and household expenses and the lower-income spouse should save and invest. Income earned on these non-registered investments may be subject to tax at a lesser rate. Be sure to keep good records and separate bank accounts if you employ this strategy.

Sharing government pension benefits
If you will soon be applying for Canada/Quebec Pension plan benefits, there is an opportunity to split income in retirement. If only one of you is entitled to benefits, or if one spouse's benefits will be significantly larger than the other's, apply to pool the benefits and have 50% paid to each of you. This can help put more money into the hands of the lower-income spouse.

Tax-smart investing outside of your RSP
Inside your RSP, all investment income accumulates tax-free. Outside your plan, the different types of investment income - interest, dividends, and capital gains - are taxed differently. Interest income, from your savings account for example, is taxed at your marginal rate, while dividends and capital gains receive preferential tax treatment. If you plan to build a non-registered portfolio, equity mutual funds are a tax-smart way to begin.

Read more about:Homes for Sale

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987

( BUS 905-828-3434
8 Website :

Homes for Sale

Wednesday, March 12, 2008

Tips for Tax time

With just a few more weeks to go before the April 30 deadline for filing your personal tax return, you can still be rewarded with a lower tax bill if you pay careful attention to all the available deductions and credits and how you claim them.

Here are some practical tips to help you reduce your tax bill.

Tax Filing Tips

  • Are you an investor?
    You may be able to claim deductions for:

  • Interest — If you've borrowed money that you're using to earn income from a business or property, such as common shares bought on the stock market, the interest you pay is generally deductible.
  • RRSP contributions — If you made an RRSP contribution by March 1, 2008 and you have enough RRSP deduction room, you can claim the deduction on your 2007 income tax return or carry it forward, if doing this will benefit you more.
  • Small business investment losses — If you or your company invested money in an unsuccessful "small business corporation" and you now have a capital loss on shares of the corporation or debt it owes you, the losses may qualify as "allowable business investment losses". Unlike other capital losses, this type of loss can be used to reduce income other than just simply capital gains, such as employment or investment income.

Are you a commuter?

  • Commuters' tax credit — If you kept your monthly transit passes for travel after June 30, 2006 on local or commuter buses, subways and trains, remember to claim the new transit pass tax credit on your 2007 personal tax return. You may be able to claim the credit for monthly passes used by your spouse or child under 19.

Are you a business owner?

  • Self-employment expenses — If you're self-employed, make sure you take advantage of all the business-related expenses that you can claim to reduce your taxes. These include automobile expenses, parking fees, business association fees, entertainment costs, convention expenses (a maximum of two per year), cell phone bills, depreciation on your computer and salaries paid to assistants, including family members. Remember that in most cases, you can deduct private health care premiums as a business expense instead of as a medical expense.

Are you an employee?

  • Employment tax credit — If you are employed, remember to claim the new employment tax credit on up to $250 on your 2006 tax return to help cover your work-related expenses.

Do you have a family?

  • Child care expenses — If you have qualifying child care expenses, you may be able to deduct $7,000 for each child under seven and $4,000 for each child aged seven to 16. The expenses have to be made to allow you or your spouse to work, carry on business, attend school or carry on grant-funded research. Usually, the lower-income spouse must claim the deduction.
  • Charitable donations — If you're married, don't claim charitable donations separately — combine them and claim them on the higher-income spouse's return. The receipts can be in either spouse's name. If you donated public company shares to a charity after May 1, 2006, you will not have to pay tax on any capital gain on the shares.
  • Pay your spouse's tax bill — If you earn income in a higher tax bracket than your spouse, consider paying your spouse's tax bill with funds from your own separate bank account. This will leave your spouse with more funds of his or her own for investments, on which he or she will pay a lower rate of tax than you would.
  • Transfer your credits — If claiming certain non-refundable credits has reduced your federal tax owing to zero without using up all the credits, you may be able to transfer the unused amount to your spouse. Credits for charitable donations, tuition fees, education amounts, the age amount (for people over 65) pension income credits or disability credits can be transferred to your spouse's return, as long as you've used as much of them as you could.

Are you a student?

  • Textbook tax credit — If you're a post-secondary student, you may be able to claim a new textbook tax credit on the amount of $65 for each month of 2007 that you qualify for the full-time education tax credit or $20 for each month you qualify for the part-time education tax credit. If you can't use all of this credit in 2007 you can transfer it to a parent or spouse or carry it forward indefinitely.

Did you move during 2007?

  • Moving expenses — Moving expenses are often overlooked as a deduction. If you started working at a new location of employment or started a new business in 2007 and you moved to a home that is 40 km closer to your new work location than your old home was, you may be able to deduct many of your moving expenses, providing that the expenses were not reimbursed by your employer.

Do you have medical expenses?

  • Medical expenses — If your family has medical expenses totalling more than 3% of your net income (or more than $1,885 if your net income is over $62,833), you may be able to claim a federal tax credit for all qualifying expenses above the threshold. Keep in mind that you can claim your expenses for any 12-month period ending in 2007 on your 2007 return. The list of qualifying expenses is long — check the CRA web site for more information.

Can't afford to pay your tax bill?

  • Reduce late filing penalties — File your return on time even if you can't pay the balance owing. Doing this will eliminate the 5% late-filing penalty, though you will still have to pay interest on your balance. If you can't file your return on time but you know you owe taxes, making a payment by April 30, 2008 will help reduce late-filing penalties.

Read more about:Homes for Sale

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987

( BUS 905-828-3434
8 Website :

Homes for Sale