CRA Form T1-M, Moving Expenses Deduction, is the Canadian federal tax form used by individuals to calculate and claim deductible moving expenses when they relocate to start a new job, carry on a business at a new location, or attend a post-secondary educational institution as a full-time student. The moving expenses deduction is governed by section 62 of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)), which allows taxpayers to deduct eligible moving expenses against income earned at the new location, provided the new home is at least 40 kilometres closer to the new work location or school than the old home, as measured by the shortest normal route.

The T1-M form guides taxpayers through the calculation of total eligible moving expenses, which can include a wide range of costs associated with the physical relocation. These include the cost of transporting and storing household effects (such as moving company fees, truck rental, packing materials, and transit insurance), travel costs for the taxpayer and family members (including vehicle expenses, meals, and accommodation during the journey), temporary living expenses for up to 15 days near the old or new residence, costs associated with selling the old residence (legal fees, real estate commissions, mortgage discharge penalties), and costs associated with purchasing the new residence (legal fees, land transfer tax) if the old residence was also owned and sold.

The form requires the taxpayer to subtract any reimbursements or allowances received from an employer or educational institution, as reimbursed expenses cannot be deducted. The net moving expenses are then entered on Line 21900 of the T1 General Income Tax and Benefit Return. A key limitation is that moving expenses can only be deducted against income earned at the new work location in the year of the move or in subsequent years if carried forward. For students, the deduction is limited to income from scholarships, fellowships, bursaries, prizes, and research grants included in income under section 56(1)(n) or (o) of the Act.

You should complete Form T1-M whenever you have relocated within Canada (or moved to Canada from outside the country) and the move satisfies the 40-kilometre closer requirement under ITA s. 62. The most common qualifying scenarios include accepting a new job in a different city or region and moving your household to be closer to the new workplace, starting a new self-employment business at a location that is at least 40 km closer to your new home than to your old home, and enrolling as a full-time student at a post-secondary institution such as a university, college, or CEGEP and relocating to be closer to the campus.

The 40-km test compares two distances: the distance from your old home to the new work or school location, and the distance from your new home to the same location. The difference must be at least 40 km. This is measured by the shortest route normally travelled by the public, not straight-line distance. The Supreme Court of Canada upheld this interpretation in the Giannakopoulos decision (1995).

You should also use this form if you previously moved and were unable to fully deduct your moving expenses in the year of the move because your income at the new location was insufficient. In that case, you carry forward the unused portion and claim it on a new T1-M in the following year. New immigrants to Canada may also qualify for the moving expenses deduction for the costs of their initial move into Canada, provided they are moving to start employment, self-employment, or full-time studies. The CRA recommends keeping all receipts and documentation for at least six years, as these may be requested during an audit or review.

A properly completed Form T1-M must include accurate taxpayer identification (full legal name, SIN, and current address) and comprehensive details about the qualifying move, including the date of the move, old and new addresses, the reason for the move (employment, self-employment, or full-time studies), and the two distances that demonstrate the 40-km requirement is met.

The expense sections must itemize all eligible costs by category. Transportation and storage expenses cover the physical movement of household belongings, including professional movers, rental trucks, packing supplies, and temporary storage. Travel expenses cover vehicle costs (which may be calculated using actual expenses or the CRA simplified flat rate per km), meals (actual receipts or flat rate), and accommodation en route. Temporary living expenses are limited to 15 days and cover meals and accommodation near the old or new residence while waiting for permanent housing.

The old residence section covers costs of selling the former home, including legal fees, realtor commissions, and mortgage discharge penalties. The new residence section covers legal fees and land transfer tax for purchasing the new home, but these are only deductible if the taxpayer also owned and sold the old residence. The reimbursement section requires disclosure of any amounts received from an employer or educational institution to offset moving costs. The net calculation subtracts total reimbursements from total eligible expenses. This net amount is claimed on Line 21900 of the T1 return, but is limited to income earned at the new work location. Unused amounts carry forward indefinitely. All expenses must be supported by receipts or other documentation retained for at least six years (ITA s. 230(4)).