I submitted the documentation they required showing my calculations, applicable receipts and letter from my employer. The CRA, in filing your income taxes, allows for a deduction for moving expenses in some cases. Since moving expenses are limited to taxable income from employment, self-employment, or scholarships, it is possible that students with non-taxable scholarships will be unable to claim moving expenses. Too many do-it-yourselfers:  Katherine has a point in CRA’s defence. CRA appears to be applying penalties, even after clarification or proof of the legitimacy of the claim has been provided by taxpayers. Based on CRA rules, a reasonable allowance is a per kilometer allowance of $0.58 for the first 5,000 kilometers and $0.52 for each kilometer thereafter. The expenditures chosen range from very small token gifts made to clients, business contacts, and sales agents, to larger payments made to various contractors doing work through an agency. They have been instructed by the Nanny State to collect as much money as possible. Our first such audit request resulted in more than $3,000 of our time to prepare the response. These individuals know your little secrets; a cash deal here, an offshore account there and a conference you expensed that was really a vacation. Yes you can claim flights and most selling costs related to your old home. In addition, the taxpayer must stop working or operating a business at the old location, and establish a new home where they will reside with their family. If the move is required by an employer and the taxpayer is forced to sell their home at a loss, it is possible to receive up to $15,000 in tax-free reimbursement of those losses, should the employer choose to assist. Many of the comments reflected frustration and even anger at the level of service CRA has been providing and confirmed that average people are being affected. You can claim a deduction eligible moving expenses on line 219 of your tax return forms. However, there are some tricky rules that apply to eligible and ineligible moving expenses that must be considered in order to remain audit-proof with the CRA. These are relatively inexpensive and can be part of your business expenses as you are using it to track your mileage. Common deductions are requiring additional documentation – moving expenses, medical expenses, and claiming an eligible dependent and in some cases, legitimate deductions are being disallowed, the individual handling the files at CRA is unreachable,  all of which means clients are needlessly incurred third party fees. The Canada Revenue Agency (CRA) may contact you about a tax return you've filed at any time during the year, not just at \"tax time.\" Don't panic and assume you're being audited. Here are a few things that may trigger a CRA audit. This also applies when the employee accepts employment at a different location from the location of their … Who qualifies to claim moving expenses? They constantly waste taxpayers’ money. Generally, you can claim moving expenses you paid in the year if both of the following apply: you moved to work or to run a business, or you moved to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution; you moved at least 40 kilometres closer to your new work or school It has been observed that rather than appropriately reviewing data received, CRA is rejecting claims and then sending the issues directly to appeals. However, you cannot carry back moving expenses to a prior year. Time to introduce a simple flat tax.”. These people are also vindictive and in some cases, they make statements and claims that are not factual in nature; however, the claims are enough to bring the CRA … These include moving expenses, caregiver amounts, tuition fees, medical expenses, home office deductions, public transit amounts, and retiring allowances. Did you know that you could deduct the commission that you paid your realtor when you moved, on your income tax return? Adding to the chaos has been the consolidation of tax centres, which appears to lead to even more objections and court appeals. ”, Last word goes to Ron who says the system is broken. The amount of any category of expense has to be reasonable, both compared to revenues and compared to other similar businesses. If this is the case, the CRA may ask you to submit this form with the receipts and explain the delay in selling your home. Knowledge Bureau Excellence in Financial Education, Tax Pros Confirm: CRA Increasingly Aggressive with Audit Practices. When you transfer an employee from one of your places of business to another, the amount you pay or reimburse the employee for certain moving expenses is usually not a taxable benefit. Ignore them, you think. Mail forwarding costs and cost of transformers or adaptors for household appliances, GST/HST on new residence and expenses that are reimbursed. Taxpayers who moved in 2018 can take advantage of expense claims for lucrative tax breaks when filing their tax returns this year. The CRA looks for personal expenses recorded as business expenses and loans taken from a company. If you’re looking to avoid getting audited, you likely want to avoid any of the following: Higher than usual expenses . The following income sources earned at the new location will not be considered qualifying income for the purposes of claiming moving expenses: All receipts for the following allowable moving expenses claimed must be kept. Yes, because at that time you were still in the common-law relationship > you can claim the full amount of moving expenses regardless of who paid it > because if it wasn't for your new job, you and your partner wouldn't have moved. Without the evidence from receipts for your claimed business expenses, the Canada Revenue Agency (CRA) may decide to reduce the number of expenses you have deducted. They provide incorrect information to taxpayers 30 percent of the time or more. The risk that we usually have with the expense accounts is the material understatement of expenses. And why do we put up with this? Likewise, each audit may require different audit procedures to ensure that we can gather sufficient appropriate audit evidence to make a conclusion. Hence, the underst… Knowledge Bureau Excellence in Financial Education, 10 Eligible, Audit-Proof Moving Expenses to Claim. The majority of tax and financial services professionals agree: CRA has stepped up audit activity on returns of average Canadian tax filers. You may be eligible for the deduction if the new home is at least 40 kilometres closer to your new place of work than the prior location. We usually perform the audit of expenses by testing various audit assertions including completeness, cut-off, accuracy, and occurrence. H&R Block Canada; Browse by category; Other; Medical expenses: Travel expenses, moving expenses, adaptation of a van, and attendant care services. If the CRA believes that you are claiming higher expenses than someone in your position usually would, it will likely get suspicious and want a closer look at your books. Consider this month’s question and leave your comments, answering: “In your opinion are tax and financial advisors taking enough time to help clients understand the benefits of charitable giving?”, Additional educational resources: Real Wealth Manager Designation, Introduction to Personal Tax Preparation. Keep reading for ways to determine just how much of your move is eligible, […] This feedback echoes criticisms in the Fall Auditor General Report released in late November, with reader comments adding a more personal perspective on audit-related issues, as well as the challenges in contacting and receiving accurate information from CRA representatives. ©2017 Knowledge Bureau Inc. All Rights Reserved. The record keeping required is to submit the number of business kilometers driven each month. Meticulous recordkeeping and not being overly aggressive in reporting of expenses will go a long way towards to reducing the risk of audit. “For 2015 and 2016, CRA has been questioning amounts claimed as income and deductions, which they already have on file. Additional educational resources: for more tips on remaining audit-proof with the CRA at tax time, pick up a copy of Essential Tax Facts, 2019 edition by Evelyn Jacks. While there is lots of scrutiny of minor claims, CRA is embarking upon more deep audits, and there’s greater activity on pre- and post-assessment reviews, but there are Inconsistencies in terms of documentation requirements year over year. The following expenses are not deductible: Note: Students claiming moving expenses may be affected by the rules which exempt scholarship, bursary and fellowship income after 2006 when they are full-time students. I find more and more they are rejecting allowable expenses or SOMEHOW losing the forms we send in because they think people will not bother resubmitting. The CRA realizes that businesses that have lots of opportunity to take in cash also have lots of temptation not to report all of their taxable income. Contact Knowledge Bureau on-line or call l-866-953-4769Copyright ©, Knowledge Bureau Inc. All rights reserved. Medical expenses, moving expenses or donations over $5,000; Vehicle expense over $15,000; Home office expense over $5,000; The CRA usually uses a risk-based approach when they decide what to audit. They found that the letter from my employer was not sufficient enough to show that I moved for the job and that there were no moving expenses covered. After this amount, one half of the reimbursement over $15,000 is tax-free. They are harassing individuals in nursing homes, even though the claims have been reviewed and substantiated, along with the disability tax credit, in previous years. Ignoring the CRA's requests for further information. Then another letter arrives, stating CRA is doing a limited audit of your moving expenses, or medical expenses, or employment expenses, or charitable donations etc. The level of detail requested by CRA to substantiate your vehicle expense is significant and to respond to this type of review, is a very time consuming and costly exercise.