What is the 40 km rule for moving expenses in Canada?

To deduct moving expenses, your new home must be at least 40 kilometres closer to your new place of work or school than your old home was. This is measured in a straight line (not driving distance), though CRA uses shortest normal route in practice. For example: if your old home was 10 km from work, your new home must be 50 km or less from the same workplace to qualify (making you at least 40 km closer). Moving within the same city often fails this test.

Can I deduct moving expenses if I moved for a new job in another city?

Yes — moving to start work at a new location is one of the primary qualifying reasons for the moving expense deduction. You must move to a home that is at least 40 km closer to the new work location. You can deduct eligible moving costs against the income earned at the new location in the year of the move (and carry forward any excess to the next year).

What moving expenses are NOT deductible in Canada?

Non-deductible moving expenses include: house-hunting trips before moving, costs of cleaning or repairing a rented house to obtain a security deposit refund, expenses for home improvements or renovations, loss on the sale of your home, mortgage penalties for breaking a mortgage early, mail forwarding costs, and costs of selling a vacation property.

What if my employer reimbursed part of my moving expenses?

You can only deduct moving expenses that were not reimbursed. If your employer reimbursed you and included the reimbursement as a taxable benefit on your T4, you can deduct the expenses as if they were not reimbursed. If the reimbursement is non-taxable (employer's policy covers actual costs tax-free), you cannot also deduct those costs — but you can deduct any eligible expenses your employer did not cover.

Can full-time students deduct moving expenses?

Yes. Students who move at least 40 km closer to their full-time post-secondary school can claim moving expenses against their scholarship, bursary, research grant, and taxable fellowship income received in the year. Moving away from school after graduating can also qualify if you moved to start a job at least 40 km from your former student residence.

Can I Deduct Moving Expenses in Canada?

Canada’s moving expense deduction is unusually generous — it covers a broad range of costs and can be claimed by both workers and full-time students. Here is everything you need to know to claim it correctly.

Who qualifies?

You can deduct moving expenses if you moved to:

Start working at a new location for an employer (new job, transfer, or returning to Canada)
Run a business from a new location
Attend full-time post-secondary school (university, college, CEGEP)

AND your new home is at least 40 km closer to your new work/school than your old home was.

This is measured as the shortest normal route, typically by road — though CRA sometimes accepts straight-line distances. Most online tax guides describe it as straight-line (as-the-crow-flies), but CRA’s published guidance says “shortest normal route.”

The 40 km test in plain math

Does your move qualify?

Distance from new home to new workplace/school − Distance from old home to new workplace/school ≥ 40 km

Example:

Old home was 8 km from old job (irrelevant to the test)
New home is 5 km from new job
Old home was 60 km from new job
60 km − 5 km = 55 km → qualifies ✅

Counterexample (fails):

Old home was 30 km from new job
New home is 5 km from new job
30 km − 5 km = 25 km → fails ❌

What expenses are deductible

1. Transportation and storage

Moving truck rental or professional moving company costs
Packing materials and boxes (when part of the moving service)
Gas and vehicle costs for moving personal belongings
Storage costs for up to 90 days while between homes

2. Travel costs

Travel to the new city for the actual move (gas, or economy airfare)
Hotel/motel stays directly related to the move
Meal costs during travel (subject to CRA’s simplified per-diem rates or actual amounts)

3. Temporary accommodation near new workplace

Hotel or short-term rental costs at the new location for up to 15 days while waiting to occupy a new home

4. Costs of selling your old home

Real estate commissions
Legal fees and land transfer tax on sales
Mortgage penalty for breaking a fixed-rate mortgage specifically because of the move (this is deductible — a common surprise)
Advertising costs

5. Costs of buying your new home

Legal fees to purchase the new home
Land transfer tax paid on purchase

6. Lease cancellation costs

Costs of cancelling your lease on the old residence

What is NOT deductible

Expense	Why not
House-hunting trips (before you decide to move)	Pre-move decision costs are personal
Cleaning old rental to get deposit back	Personal obligation of renter
Home renovations before selling	Capital improvement, not moving cost
Loss on sale of home	Capital loss, separate treatment
Mail forwarding	Administrative cost, not moving cost
New furniture or appliances	Personal purchase
Landscaping at new home	Personal
Vehicle expenses for commuting after move	Employment expense, not moving expense

How much can you deduct?

Your moving expense deduction is limited to:

Net income earned at the new location in the year of the move (for workers)
Scholarship, bursary, or research grant income (for students)

Any excess carries forward to the following tax year and is applied against the same income source.

Example:

Eligible moving expenses: $8,500
Employment income earned at new location before year-end: $6,000
Deduction in year of move: $6,000
Carried forward: $2,500

Employer reimbursement scenarios

Situation	What you can deduct
Employer pays all costs, non-taxable benefit	Nothing — you were compensated
Employer pays all costs, added to T4 as taxable benefit	Full eligible costs — offset the income
Employer pays partial costs, non-taxable	Unreimbursed portion only
No employer involvement	Full eligible costs

Simplified vs. detailed method for travel costs

For the travel portion of moving (driving to the new city), CRA offers two options:

Detailed method: Keep all actual receipts — gas, hotel, meals.

Simplified method (vehicle): Use CRA’s prescribed per-kilometre rate (same as the employment-use vehicle rate: $0.72/km for first 5,000 km in 2026) for fuel costs during the move without individual fuel receipts.

Simplified method (meals): Use CRA’s flat rate of $23/meal (maximum 3 meals/day = $69/day per person) without individual meal receipts.

How to claim

Complete Form T1-M (Moving Expenses Deduction)
Enter the deduction amount on Line 21900 of your T1
You do not need to attach receipts but must keep them for 6 years in case of audit

Can I Deduct Home Office Expenses in Canada? — If you work from home in your new location
Can I Deduct My Car for Work in Canada? — Vehicle expenses at the new work location
Closing Costs Guide by Province — Land transfer taxes on your new home purchase
Interprovincial Move Financial Checklist — Full financial guide to a cross-province move