Moving Allowances - Taxable?

[relent22]

Hi there,

I have a question regarding moving allowances (paid by the company). If I am provided with a moving allowance by my company and am required to relocate for employment purposes, I would be considered eligible for relocation, correct? Can anyone provide any ITA references to where I can find some info on moving allowances. Would I have to refer to moving expenses to get an understanding of this benefit? Since moving expenses can be deducted (for the most part), does that mean moving allowances have to be taxable and therefore included in my income?

This is my understanding, so please correct me if I'm wrong. Any help is appreciated!

[MoneyGal]

Here's the income tax bulletin you want: http://www.cra-arc.gc.ca/E/pub/tp/it....html#P76_3603 -- see section 2(a) of that bulletin

The short answer is that the moving allowance is taxable, but the amount of the taxable benefit is reduced by eligible moving expenses. So you take the allowance into income, but take the deductions against income.

Here are the eligible moving expense (from the same bulletin): http://www.cra-arc.gc.ca/E/pub/tp/it...tml#P105_11266

[relent22]

Here's the income tax bulletin you want: http://www.cra-arc.gc.ca/E/pub/tp/it....html#P76_3603 -- see section 2(a) of that bulletin

The short answer is that the moving allowance is taxable, but the amount of the taxable benefit is reduced by eligible moving expenses. So you take the allowance into income, but take the deductions against income.

Here are the eligible moving expense (from the same bulletin): http://www.cra-arc.gc.ca/E/pub/tp/it...tml#P105_11266

Thanks for your response!

My understanding of allowances is that they are different from reimbursements (mainly allowances are taxable while reimbursements usually aren't). Since this allowance is given before I spend it, would I really be eligible for the moving expenses deductions? It just doesn't make sense to me, but I may have an incorrect understanding. If I get a moving allowance of $4000, I would have to pay tax on that. If used that $4000 for eligible moving expenses (lets say the entire allowance is used for travel costs), then I can deduct that from my income? Essentially that means I pay no tax on the allowance, since it was all deducted?

Again, I have a very narrow understanding of this, so I really appreciate your help!

[relent22]

More specifically, I'm confused about sections 2(a) and 2(e) of the bulletin you posted. They seem to contradict each other, no?

Under section 2, it says that "When calculating income for the year, an employee or a self-employed taxpayer may deduct eligible moving expenses to the extent that:

(a) they are not paid for by the employer (in the case of an employee);

(e) any reimbursement or allowance received for such expenses has been included when calculating income."

In my situation, the moving expenses are paid for by the employer (via the allowance). Therefore, according to (a), I would not be elegivle to deduct moving expenses. However, in (e), it says I am eligible for deductions of the allowance for the moving expenses since it has been included in my income.

So which section holds precedent, or am I just interpreting this incorrectly?

[relent22]

Please ignore my prior posts. I think I understand now. The allowance would be included in my income, but I can deduct any amounts of the allowance used for eligible moving expenses. Thanks again, MoneyGal.