Moving and Relocation Expenses
In general, amounts you pay or reimburse to cover the moving expenses of an employee, the employee's family and the employee's household effects do not constitute a taxable benefit for the employee in the following situations:
- The employee is transferred from one of your establishments to another.
- The employee accepts employment in a locality other than the one in which they reside.
- The employee moves from a remote area to another area at the end of the employment contract.
- The employee returns to the establishment from which they were transferred, after the employment ends.
- The employee begins a new job in one of your other establishments.
If none of the above situations applies, the employee receives a taxable benefit, in which case you have to include the value the benefit in boxes A, G, I and L of the employee's RL-1 slip (see courtesy translation RL-1-T).
The following moving expenses paid or reimbursed by you are not a taxable benefit for the employee if they are reasonable expenses:
- the cost of reconnecting telephone and cable services, and of hooking up household appliances;
- the cost of modifications required to install drapes, blinds, carpets, and plumbing or electrical systems, provided the changes are needed to enable the employee to continue using their property in a new residence.
If the expenses are not reasonable, the employee receives a taxable benefit and you have to include the value of the benefit in boxes A, G, I and L of the employee's RL-1 slip.
The employee may be able to claim unreimbursed moving expenses when filing their income tax return. The expenses you reimburse to the employee do not constitute a taxable benefit for the employee if a deduction can be claimed for them.
An allowance you pay to an employee to cover expenses related to relocation is not taxable as long as it does not exceed an amount equivalent to the employee's salary or wages for two weeks. The amount of salary or wages to be taken into account is the employee's salary or wages on the day they begin the new assignment.
If the allowance exceeds an amount equivalent to the employee's salary or wages for two weeks, the excess portion is taxable and must be included in boxes A, G, I and L of the employee's RL-1 slip.
You must withhold and pay Québec parental insurance plan (QPIP) premiums on the portion of a tax-exempt allowance to cover moving and relocation expenses that exceeds $650.