Maxine used to work and live in Alberta, but has accepted a new job in Ontario. The new job has a starting salary of $105,600 per year, or $8,800 per month. She moved there with her family in October, so she could start her new job on November 1. While she had rented her accommodations in Alberta, she bought a new house in Ontario. She incurred the following expenses as a result of the move: • canceling the lease on her rental apartment, $1,200.
• hiring movers to pack and move her household effects, $12,000.
• legal fees on the house purchase, $1,400.
• land transfer tax on the house purchase, $3,000.
• cost of disconnecting utilities in Alberta, $100.
• cost of connecting utilities in Ontario, $200.
• gas, food, and lodging while traveling from Alberta to Ontario, $2,800.
How much can she claim for moving expenses for the year of the move?

Question

Quizplus · Accepted Answer

To determine the moving expenses that Maxine can claim, we need to follow the rules set by the Canada Revenue Agency (CRA). According to CRA's guidelines, in order to qualify as a deductible moving expense, the move needs to meet the following conditions:

1. The move must be for employment purposes, and the new workplace must be at least 40 km closer to Maxine's home than her old place of work.

2. Maxine must have moved at least 40 km closer to her new place of work.

3. Maxine must establish a new residence, either by buying or renting a new home.

Maxine's move clearly meets all three conditions, so she can claim her moving expenses on her income tax return.

Now, let's add up Maxine's eligible moving expenses:

- Canceling the lease on her rental apartment: $1,200
- Hiring movers to pack and move her household effects: $12,000
- Legal fees on the house purchase: $1,400
- Land transfer tax on the house purchase: $3,000
- Cost of disconnecting utilities in Alberta: $100
- Cost of connecting utilities in Ontario: $200
- Gas, food, and lodging while traveling from Alberta to Ontario: $2,800

Total eligible moving expenses: $20,700

However, Maxine cannot claim the full amount of $20,700 as a deduction. CRA sets a limit on the amount of moving expenses that can be claimed, based on Maxine's employment income. In Maxine's case, her employment income for the year is $105,600, so the maximum amount of eligible moving expenses she can claim is $16,300.

Therefore, the best choice is B), $16,300.

Maxine Used to Work and Live in Alberta, but Has