written on behalf of Feigenbaum Law
The Income Tax Act and Moving Expenses
Under the Income Tax Act, (the Act), a taxpayer can claim moving expenses during the year in which they moved if both of the following conditions apply:
- the taxpayer moved to work or to run a business, or the taxpayer moved to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution; and
- the taxpayer moved at least 40 kilometres closer to their new work or school.
For more than thirty years, the man in question had been moving annually between Whitby and Ottawa (a distance of just over 400km), teaching in the Whitby area during the school year and in the Ottawa region during the summer.
Until 2014, he was permitted to deduct his $1,400 moving expenses from his annual taxes. In 2014, a tax court judge did not permit his expenses claims for the annual move he made that year.
Tax Court Judge: The Taxpayer’s Teaching Arrangement was a “Working Vacation”
The Move Upriver
On the last day of classes in June 2018, the man loaded supplies, including clothing and food, into an old fibreglass canoe. He also brought along a weed-whacker which he had converted to be used as a makeshift motor. Setting out from the public docks in Whitby, the man moved upriver towards Ottawa. Along the way he kept track of his expenses, collecting receipts from:
- admissions fees to five provincial parks through which he had to traverse
- firewood for three nights’ worth of campfires; and
- several bags of ice needed to keep food and medication cool.
The man ended up submitting a claim for just under $1,000.
He recently learned that the CRA had approved the expense claim and notes that, based on his research, he may be the first taxpayer to successfully claim moving expenses for a relocation via canoe since the Act was amended in the early 1970’s.
Experts have noted that there is nothing specific in the Act which stipulates the mode of transportation that is required for a move, nor what is considered a “reasonable” expense, effectively opening the door for what the man did. He essentially did nothing different than a person who moves via automobile or moving truck, but managed to do it in a more cost-effective way.
The man is already planning his next relocation, and hopes to again do it in a novel way.
How Can Feigenbaum Law Help?
At Feigenbaum Law we regularly represent clients who are involved in tax related litigation. We have significant experience in the administration and litigation of tax matters in both the U.S. and Canada. Our proficiency with both countries tax systems gives us a unique perspective and thorough understanding of the policies behind tax regulations.
Our approach with every client is always personalized. We take the time to understand the facts of your case to develop the best possible legal solution. With the world of tax always changing, we take great care to stay current on all developments in the law. When approaching your problem, we carefully consider all administrative solutions available to craft a response that proactively takes into account the policies and best practices of a given tax authority.
Read our blog series on tax disputes and litigation to learn more about recent tax disputes.
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