One of the big misconceptions out there is that moving expenses are deductible. Yes of course that’s true, but there are restrictions and rules.
It is widely known that moving expenses are only deductible when moving from one job to another. Students may also, under certain circumstances claim moving expenses.
One major restriction that slips people’s minds is that generally the move must be within Canada. If you move to Canada from another country (or vise versa) for employment (or self-employment) your moving costs are not deductible.
However, if you are away from Canada but are still considered a resident of Canada for tax purposes throughout the year (perhaps because you haven’t cut your residential ties or you are a deemed resident), then the “in Canada” restriction is not applied. A move to and from a foreign location will qualify and the new location need not be in Canada.
Your move must result in you being at least 40km closer to your new place of employment (or self-employment).
You must cease your business or employment and your moving expenses are only deductible to the extent of your income from the new location in the year or the following year.
If you have been in full-time attendance at a post-secondary institution in Canada and move to start a job within Canada, you may claim moving expenses.
If you move to attend school full-time at an institution you may deduct moving expenses, but only against income from scholarships, fellowships, research grants and similar awards.
Foreign students coming into Canada to study at a post-secondary institution are also entitled to deduct moving expenses against income from scholarships, fellowships, research grants and similar awards.
As with employment moves, you must be at least 40km closer to your new school.
You are considered a full-time student for the purpose of claiming moving expenses if you regularly attend a post-secondary school and you take, during a semester, 60% or more of the usual course load for the program in which you are enrolled.
For more info on moving expenses, check out Interpretation Bulletin IT-178R3.