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Most employee relocation expenses your employer pays for a move to a new work location are not taxable to you, as long as they’re on the CRA’s list of qualifying costs. Everything else the employer pays or reimburses counts as a taxable benefit. The $650 allowance for small extras and a housing loss payment have their own rules, covered below.
Which employee relocation expenses come tax free?
The CRA lists what an employer can cover without creating a taxable benefit. It’s a long list, and it follows the actual cost of moving a household.
| Cost the employer covers | Taxable to you? |
|---|---|
| House hunting trip, with child care and pet care | No |
| Travel to the new location, with reasonable meals and lodging | No |
| Moving or storing household effects | No |
| Connecting utilities, appliances and fixtures | No |
| Selling the old home (advertising, legal fees, agent commission) | No |
| Legal fees and land transfer tax on the new home | No |
| Reasonable temporary living costs until the new home is ready | No |
| Any cost not on the list | Yes |
Think of a relocation as two piles. Pile one is the list above. Pile two is everything else, such as a new couch, a bigger deposit on a rental, or a thank-you gift card from the boss. Pile two is taxable no matter how reasonable it feels.
What about the $650 allowance?
An employer can pay a flat $650 or less for small moving extras without tax, if you certify in writing that you spent at least that much. Go over $650 and the whole amount is taxable. That’s a bookkeeping rule, so keep a signed note and don’t count on it for big items.
Before you sign an offer, ask which costs the employer pays straight to the mover and which it reimburses after you send receipts. Then ask payroll what will show on your T4, and get the answer in writing, because the slip reporting depends on how your employer sets it up. Keep every receipt either way, since a reimbursement needs proof of the cost behind it.
Is a housing loss payment taxable?
Partly. If your new home is at least 40 kilometres closer to the new work location, by the shortest public route, only half of the amount above $15,000 is taxable. The first $15,000 is not. Say your employer covers a $25,000 loss on the sale. The taxable part is half of $10,000, which is $5,000.
If the move doesn’t meet the 40 kilometre test, the payment is fully taxable. Check the distance before you agree to anything, because the difference here can be thousands of dollars.
What does a taxable relocation payment cost you?
It’s taxed like pay. Take an Ontario employee on $85,000. The income tax calculator shows $15,551.05 of tax. Add a $6,000 taxable relocation benefit and it becomes $17,330.05, so the benefit costs you $1,779.00. That’s about 30 cents on the dollar.
Want to see the effect on pay you actually take home? The take-home pay calculator shows the year with different salary figures. The bonus tax calculator is a rough guide for a lump sum, though a relocation benefit isn’t a bonus, and how CPP applies to one depends on how it’s paid.
Can you deduct your own moving costs?
Yes, when you pay them yourself. The move must be for work, a business or full-time post-secondary study, and your new home must be at least 40 kilometres closer to the new work location or school. You claim the costs on Form T1-M and enter the deduction on line 21900. It only comes off employment or self-employment income earned at the new location. Unused amounts carry forward against that same income.
The employer’s reimbursement matters here. The CRA’s page on line 21900, moving expenses puts the rule this way.
If you received a reimbursement or an allowance from your employer for your eligible moving expenses, you can only claim your moving expenses if you include the amount you received in your income or if you reduce your moving expenses by the amount received.
Line 21900 Moving expenses, canada.ca
Claiming the same cost twice is the mistake to avoid.
A $6,000 deduction against the same $85,000 salary cuts the calculator’s tax from $15,551.05 to $13,772.05, a saving of $1,779.00. The tax refund calculator shows how that lands on your return.
What should you do before and after the move?
Before: get the relocation terms in writing, ask what’s paid direct and what’s reimbursed, and measure the old and new distances to the work site. After: keep every receipt in one folder, check the T4 against your offer letter, and decide which of the two claims applies, a tax-free employer cost or your own deduction. Mixing them up is how people lose a few thousand bucks they were entitled to.
Where these figures come from
The Canada Revenue Agency‘s pages on moving and relocation expenses for employers, and on line 21900 moving expenses for individuals, as read in 2026. The tax figures come from this site’s income tax calculator for 2026. No government body has reviewed or endorsed what you read here.
Frequently asked questions
Is a relocation package taxable in Canada?
Costs on the CRA's qualifying list are not taxable to you. Anything else your employer pays or reimburses is a taxable benefit.
What is the $650 rule?
An employer can pay $650 or less for incidental moving costs without tax if you certify in writing that you spent at least that amount.
How much of a housing loss is taxable?
For an eligible relocation, half of the amount over $15,000. Other housing loss payments are fully taxable.
How far must I move to qualify?
The new home must be at least 40 kilometres closer to the new work location by the shortest public route.
Can I deduct moving costs my employer already paid?
Only if you include the reimbursement in income or reduce your claim by it.
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