Canadian Moving Taxes

[jgoveas]

Hey guys,

I have a bit of a weird question. My husband and I left Los Angeles in July and arrived in Montreal. Our moving expenses will be reimbursed by his company. In LA, the old company also included in our budget the amount of taxes we would incur from being reimbursed. However, this company doesn't do that.

My question is three fold:

1. Will we be taxed on the reimbursement from the company as having received income in Canada?
2. If we do not ask the company to reimburse us can we use the expenses as a tax deduction for the 2009 tax year in Canada even though we moved from the states?
3. My husband is required to repay this amount should he leave the company in less than one and a half years and this is a possibility. Since we will eventually have to pay back a portion of their reimbursed amount (depending on the time he remains at the company), is it worth it to ask for the reimbursement or just claim the moving expenses as a tax expense for the 2009 Canadian year (if this is possible)?

Thank you!

[nelsona]

First, the treatment of moving expenses is treated differently in canada and US. Also, no moving expenses are deductible on your Cdn return for your relocating back to Canada, so you will want to get it reimbursed, even if it becomes taxable in canada.

Now, who is paying your moving expenses? Your US firm of your Cdn one?

[jgoveas]

Thanks Nelsona

The canadian one will be paying it.

[nelsona]

So, no, none of the moving expenses will be deductible on your Cdn return , and any reimbursement will be treated as Cdn income. If you were moving from Victoria to YUL eligible expenses would be deductible, but not for repatriation.

But don't forget you also have a US return to file this year as well, and you will likely want to report full year 1040, so the expenses might come in handy ot reduce your US tax burden.

[jgoveas]

But would the US govt consider moving expenses OUT of the country valid? And if we get them reimbursed then we couldn't claim them on the US side right?

Thanks again!

[nelsona]

That is what I said.

[nelsona]

Remeber that this is how moving expenses work, on either side of the border:

You have expenses, some are eligible as moving expenses, some are not. Your firm reimburses you on some none or all of these.

You need to report as income all theat the company gives you. You then get to deduct whatever expenses are eligible, per the rules of each country. For US, some of your expenses (reimbursed or not) will be deductible. For canada, no expenses will be deductible.

But in both jurisdictions, any reimbursement you get will be taxable.

[Nishant]

Hello Nelsona,
On the same topic of moving expenses, I have some questions.

My US employer paid me moving expenses while I was resident of Canada. Since these appear on my last pay stub on income to be declared for Canada taxes. I need to show these on Canada return this year. The money is shown on my pay stub under two categories
a) Moving allowance- say 10,000
b) Moving expense adjustment- say 10,000.

Are any of the moving expenses deductibles in Canada returns? If yes, is there a maximum limit on moving expense deduction?

Thanks

[nelsona]

None are deductible in Canada for one's return to canada.

[nelsona]

... and none are deductible on your move out of canada either, since yo uare not reporting any wages after the move.

You should have held off receiving the money until after you moved (which would make sense, no?) You should only get reimbursed after you move.