CRA wins case against remote worker who claimed $67,000 in moving expenses

Tax season is now underway, and if you moved in 2024, you may be entitled to write off your moving expenses, assuming you qualify. Not all moves, however, qualify as an “eligible relocation,” and the ability to deduct moving expenses can be challenged by the taxman, which is what happened in a recent case decided earlier this month. But before delving into the details of this latest case, let’s briefly review the rules for deducting moving expenses.

Under the Income Tax Act, you can deduct moving expenses for an eligible relocation, which is a move that allows you to work (or to attend school) at a new work location, provided the move brings you at least 40 kilometres closer to your new work (or school) location. The expenses can be deducted from the income you earned at your new work (or school) location.

But can you have eligible relocation when you are working from home, and continue to work from your new home, such that your moving expenses are tax deductible?

That was the issue in this recent case involving an Ontario taxpayer who claimed nearly $67,000 of moving expenses on her 2021 tax return for a move she made in early February of that year. The Canada Revenue Agency denied her claim for moving expenses, and she took the matter to Tax Court.

In the years at issue, the taxpayer was employed as a territory account manager for a technology company who was responsible for selling the company’s software and technical services. She spent most of her time interacting in meetings with prospective and existing customers. Prior to the pandemic, she worked primarily from the company’s Toronto offices, but this changed in March 2020 when the corporate offices were closed because of the COVID-19 pandemic, and she began