It’s Your Move
it’s Your move
Provision
The information contained herein is provided to assist transferred/released CF members, RCMP members
and Public Service employees. The information in this manual is based on reliable sources however
Brookfield Global Relocation Services assumes no liability for errors and/or omissions.
Brookfield GRS provides relocation advice and services. Brookfield GRS employees are not financial tax,
accounting or legal advisors. Brookfield GRS requests that transferees seek the independent advice of
professional advisors with respect to these issues.
It is your responsibility to confirm your benefits/entitlements under the Integrated Relocation Program. In
the event of conflicting or contradictory information, in all cases, the IRP policy document shall take
precedence.
LegaL DiscLaimer
Information provided in this publication is intended to provide general information. The user accepts full
responsibility for the use of any information provided in this manual.
The information is believed to be accurate, complete and current when written however Brookfield Global
Relocation Services cannot guarantee that it will remain accurate or complete or that it will remain current.
The information in this publication does not constitute accounting, consulting, investment, legal, tax
or any other type of professional advice, and should be used only in conjunction with the services of a
Brookfield Global Relocation Services advisor and any other appropriate professional advisors who have
full knowledge of the user’s situation.
Certain links referred to in this manual are maintained by third parties over which Brookfield Global
Relocation Services has no control. Brookfield Global Relocation Services makes no assurances as to the
accuracy or any other aspect of the information provided or indicated on such Websites.
Brookfield Global Relocation Services is not responsible for direct, indirect, special or consequential
damages, regardless of the cause, arising from the use of the information contained in this manual. The
information contained in this manual may not be used or copied for commercial use. Personal and noncommercial use of the information contained in this document is accepted.
Tax Smart
Canadian Tax impliCaTionS
ReloCaTion expenSeS
of
Taxes are as much a part of relocation as they are of any other
activity in which money changes hands between employer and
employee. In some cases, there may be “taxable benefits” on
which you have to pay taxes. In other cases, there may be
expenses that you pay and may be eligible to deduct for income
tax purposes.
Either way, objectives are the same – minimize the taxes that you
have to pay and maximize the after-tax benefits that you are
eligible for.
We recommend that you consult an independent and professional
financial planner to help with your relocation strategy and your financial planning.
Tax laws and regulations can and do change. Please note that this manual is intended only as a guide. What you
can and cannot claim will depend on your particular circumstances. What was accurate when we wrote this guide
may be out of date when you actually have to use it.
For most people, it comes as a bit of a surprise that taxes are even a consideration in relocation.
Tax deduCTible
In some cases, you may incur expenses during your relocation that are not paid or reimbursed by your employer.
For tax purposes, the question to be addressed is whether or not these expenses are “eligible moving expenses”.
If so, they can be deducted from your employment income (you will need to use Form T1-M with your tax
return).
According to The Canada Revenue Agency (CRA), you must relocate to a residence that is located at least 40
kilometers closer to your new work location than your old residence.
Generally, only moves within Canada are eligible. However, there is an exception for individuals making foreign
moves if they are still considered to be Canadian residents.
do i Really benefiT fRom benefiTS?
A taxable benefit is treated as if the value that you receive is additional income. The tax that you pay will depend
on your taxable income and the incremental tax rate of the province in which you are living as of December 31st.
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it’s your move
Here is an example:
Bob and his family are relocating from Ottawa to North Bay. Bob earns $65,000 a year and has a net income of
$45,000.
If Bob receives a taxable benefit of $1,000 then his annual income increases to $66,000. Since he lives in Ontario,
his incremental tax rate will be 22% for federal taxes and 9.15% for provincial taxes. He will then have to pay an
additional $311.50 in taxes to cover the taxable benefit.
Bob and his family are ready to move. Their household goods are packed and on the van but since they aren’t
scheduled to leave for another week, they need to move into a hotel. The cost for meals and lodging for Bob, his
wife and their two children for the week add up to $1,900. These costs are reimbursed under the Integrated
Relocation Program. This is a non-taxable benefit. There are no taxes to pay with respect to this benefit.
It is, however, a hectic time. The children are underfoot. Bob, in desperation, puts the children in day- care. The
cost is $400. The expense is reimbursed but is considered a taxable benefit. When Bob gets his T4, he will see
an additional $400 listed as a taxable benefit. It is treated as if it is income and Bob will have to pay an additional
$124.60 in taxes.
Bob could see this as an unwarranted cost. On the other hand, he could argue that it only cost him $124.60 to
look after his children for a week – a savings of $275.40 and well worth it.
Which is the best option? There are no simple answers. It depends on your income and the marginal tax rate of
the province in which you live at the end of the year.
non-Taxable benefiTS
For the most part, the money that you receive to cover your relocation expenses is a reimbursement and therefore
is not generally taxable. If you spend $1,000, you are reimbursed $1,000. There are no taxes. Those items are
identified as a “non-taxable benefit” in this guide.
Taxable benefiTS
According to CRA, taxpayers are generally taxed on the value of all benefits they receive by virtue of their
employment, other than certain items that are specifically excluded from taxation.
If you receive $1,000 in taxable benefits, then you will have to pay taxes on this just as if it were part of your pay
cheque. If your incremental tax rate is, say, 40%, you would have to pay $400 in taxes. Nobody likes paying taxes
but the optimist would say that you receive $1,000 of value and it only cost you $400 – an absolute bargain.
Taxable benefits are shown on your T4 slip and must be reported on your income tax return. CRA has published
an interpretation bulletin (IT-178R3) that outlines its views on eligible moving expenses. You can find this publication
on the Web at: www.cra-arc.gc.ca
In some cases, employees gain what are considered taxable benefits from a
relocation (childcare while moving for example or taking your mother-in-law on a
House Hunting Trip).
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Tax Smart
example – Home equiTy aSSiSTanCe
example 1:
Sheila and her family are relocating from Moncton to Kingston. Even though Sheila has just had an addition built
on her house in Moncton, the housing market is poor and she must sell the house for a loss.
The loss on the sale of the home would be calculated as follows:
Net proceeds on home
Original cost of home
Loss on sale of home
$160,000
$170,000
($10,000)
In addition to her loss on the sale, Sheila had also made capital improvements on the house at a cost of $10,000,
which she did not recover. Sheila would receive the following reimbursements under the Core funding:
Home equity assistance (to a maximum of $15,000)
80% of $10,000
under the non-core funding, she would receive:
Home Equity Assistance ($10,000 - $8,000)
Capital improvements
Total reimbursements
Her taxable benefit would be:
Total reimbursements
Maximum allowable non-taxable reimbursement
Net amount
Taxable amount (50% of the net)
$8,000
$2,000
$10,000
$20,000
$20,000
$15,000
$5,000
$2,500
Note that if Sheila chose not to take the $20,000 reimbursement, she would not be able to deduct the loss on the
sale of her home on her income tax return.
example 2:
Pierre and his family are relocating from Val d’Or to Gatineau. Pierre has just completed renovating his home and
he too must sell the house at a loss.
Net proceeds on the sale of the home
Original cost of home
Gain on sale of home
$175,000
$170,000
$5,000
Cost of improvements
$10,000
Loss on sale of home due to capital improvements
$5,000
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it’s your move
pierre would receive the following reimbursements under the core component:
Home Equity Assistance
$0
He would receive the following reimbursements under the non-core funding:
Capital improvements
$ 5 000
Since his reimbursement does not exceed the allowable non-taxable reimbursement limit of $15,000 he does not
have a taxable benefit on his T4.\
Tax impliCaTionS aCCoRding To CRa RegulaTionS
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it’s your move
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TeCHniCal RefeRenCeS
interim lodging,
meals and incidentals
(misc.
expenses/allowance)
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits” Chapter 3, Board and lodging
• IT-470R “Employees’ Fringe Benefits” paragraph 35
• Income Tax Act, paragraphs 62(3)(a), (c)
• Technical Interpretation 9918007 “Moving expenses”
• Revenu Quebec Guide IN-253-V “Taxable Benefits” sections 6.1, 6.2, 6.8, 8.10
Traveling to your new
location
**
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits” Chapter 3, Moving expenses and
relocation benefits
• IT-470R “Employees’ Fringe Benefits” paragraphs 35-36
• IT-178R3 “Moving expenses”, paragraphs 12-22
• Income Tax Act, paragraph 62(3)(a)
• Revenu Quebec Guide IN-253-V “Taxable Benefits” sections 8.10
Rental
accommodation
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”, Chapter 3, Housing – Rent-free
and low rent
• Income Tax Act, subsection 6(23) “Employer-provided housing subsidies”
• Income Tax Act, paragraph 62(3)(d) “Moving expenses”
• Technical Interpretation 9821655 “Relocation expenses employee”
• Revenu Quebec Guide IN-253-V “Taxable Benefits” sections 6.1, 6.8, 8.10
Selling your Home
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”, Chapter 3, Moving expenses and
relocation benefits
• IT-470R “Employees’ Fringe Benefits”, paragraphs 35-38
• IT-178R3 “Moving expenses”, paragraphs 12(e) & 16
• IT-120R6 Principal Residence
• IC 72-17R5 “Procedures concerning the disposition of taxable Canadian property
by Non-residents of Canada”
• Income Tax Act, paragraph 62(3)(e) “Moving expenses”
• Income Tax Act, subsection 6(23)
• Technical Interpretation 9913025 “Payment of relocation costs by employer”
• Technical Interpretation 9913795 “Moving expense (mortgage penalty)”
• Queen vs. Merton A. Collin 86 DTC 1477, DTC 6369 (FCTD) – Mortgage Interest
Buy Down
• G. Pollard vs. MNR 88 DTC 1110 (TCC) – Interest paid as Mortgage Penalty
• Revenu Quebec Guide IN-253-V “Taxable Benefits” section 8.10
• IT-421R2, “Benefits to individuals, corporations, and shareholders from loans or
debts”, paragraph 4
• Income Tax Act, subsection 80.4(1)
Temporary dual
Residence assistance
(TdRa)
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”, Chapter 3, Moving expenses and
relocation benefits
• IT-178R3 “Moving expenses”, paragraph 12(g)
• Income Tax Act, subsection 6(23) “Employer-provided housing subsidies”
• Income Tax Act, paragraph 62(3)(g)
• Technical Interpretation 9821655 “Relocation expenses employee”
• Technical Interpretation 9921675 “Reimbursement of interest on Old home”
• Technical Interpretation 9913025 “Payment of relocation costs by employer”
• Revenu Quebec Guide IN-253-V “Taxable Benefits” section 8.10
Many of the technical references listed above and on the next page are only available through tax professionals.
Please contact your accountant for additional information.
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it’s your move
loss on equity
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”, Chapter 3, Moving expenses and
relocation benefits
• IT-178R3 “Moving expenses”, paragraph 12(f)
• Income Tax Act, subsection 6(23) “Employer-provided housing subsidies”
• Income Tax Act, subsection 62(3)
• Technical Interpretation 9918007 “Moving expenses”
• Revenu Quebec Guide IN-253-V “Taxable Benefits” section 8.10
buying your new Home
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”, Chapter 3, Moving expenses and
relocation benefits
• IT-178R3 “Moving expenses”, paragraph 12(f)
• Income Tax Act, subsection 6 (23) “Employer-provided housing subsidies”
• Tachnical Interpretation 9918007 “Moving Expenses”
• Revenu Quebec Guide IN-253-V “Taxable benefits” section 8.10
$25,000 Home
Relocation loan
Shipping your Household
goods and
effects
Spousal Job Search
assistance
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”,Chapter 3, Interest-free and lowinterest loans
• Income Tax Act, subsection 6(9) “Amount in respect of interest on employee
debt”
• Income Tax Act, paragraph 62(3)(e) “Moving expenses”
• Technical Interpretation 9918007 “Moving expenses”
• Technical Interpretation 9907486 “Moving expenses”
• Revenu Quebec Guide IN-253-V “Taxable Benefits” sections 8.9, 8.10
• IT-421R2, “Benefits to individuals, corporations, and shareholders from loans or
debts”, paragraphs 20, 21, 22
Technical References
• T4130(E) “Employers’ Guide Taxable Benefits”, Chapter 3, Moving expenses and
relocation benefits
• IT-470R, “Employees’ Fringe Benefits”, paragraph 37
• Income Tax Act, subsections 6(20),(21) “Benefit re eligible housing loss”
• Technical Interpretation 9913025 – “Payment of relocation costs by employer”
• Revenu Quebec Guide IN-253-V “Taxable Benefits” section 8.10
Technical References
• Income Tax Act, paragraph 6(1)(a)
• Income Tax Ruling 9425775 “Taxable Benefits”
• Income Tax Ruling 2008-0276771E5 “Taxable Benefits – Relocation”
Many of the technical references listed above and on the next page are only available through tax professionals.
Please contact your accountant for additional information.
Taxable benefiTS on youR finanCial WoRkSHeeT
Each year, your T4 form arrives in the mail signalling that once again it’s tax time.
Having just been through a 0relocation only complicates the issue. Fortunately, you have been working with
Brookfield GRS under the IRP and keeping careful track of expenses. Just what is considered to be a taxable
benefit is already worked out. You just need to know where to find it.
Remember that brookfield gRS needs to know where you are in order to send you the T4. if you move, let
your Relocation advisor know immediately.
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Tax Smart
box on
Tax Slip
T4
R1
14
A
line on Tax
ReTuRn
deSCRipTion
T1
TP1
employment income The total income before deductions appears in Box 14. It includes
101 101
16
17
18
22
36
N/A
B
C
E
Note
308
308
312
437
N/A
N/A
98
N/A
451
N/A
37
Note
248
297
40
L
N/A
N/A
55
H
375
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all salary, wages (including pay in lieu of termination notice), bonuses, vacation pay,
tips and gratuities, honorariums, director’s fees, management fees and executor’s and
administrator’s fees received to administer an estate (as long as the administrator or
executor does not act in this capacity in the regular course of business)
Employee’s Canada Pension Plan (CPP) contributions
Employee’s Québec Pension Plan (QPP) contributions
Employee’s Employment Insurance (EI) premiums
Income Tax Deducted
interest-free and low-interest loan An M/E who used non-core funds to reduce the
interest on their mortgage through the home relocation loan has received a taxable
benefit. The amount earned in that calendar year will be reported in box 36. This amount
included in box 14/A and is used for reporting purposes only.
employee home-relocation loan deduction Although a benefit amount was
reported in box 36 for the subsidized loan interest, an M/E who receives a low-interest
home-relocation loan through CIBC in entitled to an offsetting deductible portion, which
will appear in Box 37. This amount is a deduction on line 248 of the personal tax return.
It has not reduced the amount in box 14.
Other taxable allowances and benefits. This amount is already included in box 14 and
is used for reporting purposes only. Box L includes the interest-free and low-interest loan
amount shown on box 36 of T4.
Quebec Parental Insurance Plan
As a rule, the salaries and wages that must be entered on the RL-1 slip are those paid:
•
•
To an employee who reports for work at an establishment of the employer in Quebec;
To an employee who, though not required to report for work at an establishment of the employer (in
Quebec or elsewhere), is remunerated by an establishment of the employer in Quebec.
For example purposes, the following scenario is provided with the calculations and resulting tax slips.
Mr. Smith moves from one location in Quebec to another location in Quebec and during the tax year he received
a base allowance of $650 plus a cash payment of $5,608.08, a benefit related to home inspection purchase in the
amount of $375.00 and an interest subsidy in the amount of $192.65. Since Mr. Smith is moving within Quebec,
a RL-1 must be produced in addition to a T4.
Mr. Smith was earning $2,535.89 of salary every two weeks.
The illustration below summarizes the method of calculating the amounts that are included on both the T4 and the
RL-1 with an example of each tax slip following.
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it’s your move
Taxable Benefits
T4 Amount
T4 Box
Personalized Cash Out
+
$
5,608.08
$
5,608.08
Add : Non-accountable Cash Allowance
+
$
650.00
$
650.00
Total Taxable Benefits
=
$
6,258.08
$
6,258.08
Less : Non Accountable Allowance deduction
-
$
650.00
$
2,535.89
Add: Non-cash taxable benefits (home inspection purchase)
+
$
375.00
$
375.00
Total Other Taxable Allowances
=
$
5,983.08
40
$
4,097.19
Interest Subsidized Loan benefit
+
$
192.65
36
$
192.65
Total Taxable Employment Income
=
$
6,175.73
14
$
4,289.84
Deduction Calculations
T4 Amount
Federal Tax ($5,608.08 x 26%)
$
T4 Box
1,458.10
22
N/A
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Provincial Tax ($3,722.19 x 24%)
Canada Pension Plan ($5,608.08 x 4.95%)
RL-1 Box
L
Note
A
RL-1 Amount
$
893.33
RL-1 Box
E
Quebec Pension Plan ($3,722.19 x 4.95%)
$
184.25
17
$
184.25
B
Employment Insurance ($5,608.08 x 1.36%)
$
76.27
18
$
76.27
C
Quebec Parental Insurance Plan ($3,722.19 x 0.506%)
$
18.83
55
$
18.83
H
2 Week Deduction Calculation for RL-1
Monthly Salary
x 12 = Yearly Salary
/ 52 = Weekly Salary
x 2 = 2 week Deduction
Note: No deductions on non-cash taxable benefits
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RL-1 Amount
Tax Smart
Calculation of taxable portion of the personalized cah payout for RL-1
$
$
$
$
5,494.42
65,933.04
1,267.94
2,535.89
Personalized Cash Payout
Non-accountable cash allowance
Non Accountable Allowance deduction
$
$
$
$
5,608.08
650.00
(2,535.89)
3,722.19
example of a T4 Slip
example of a R1 Slip
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it’s your move
What do i do if i notice an error on my T4 received from brookfield gRS?
If you believe that your T4 is incorrect you should contact your Brookfield GRS Advisor. They will discuss the issue
with you and if there is a requirement to correct the T4 an AMENDED T4 will be issued within 2-3 weeks after
notification. Brookfield GRS will also send a copy of the amended T4 to CRA explaining the problem. This way the
incorrect T4 will be discarded and not used for calculation purposes.
What do i do if i have not received or lost my T4?
If you have not received your T4 by March 15th, contact your Brookfield GRS Advisor at destination and a
“DUPLICATE” T4 will be issued to you with 1-2 weeks upon notification.
Why have i received two T4s and a Rl-1?
If you have received two cash payments in two different provinces, one of which is Quebec, separate T4s have to
be issued indicating the payment and deductions for each location. Also you will receive a RL-1 for the cash
payment made in Quebec. Please note that the amount reported on the RL-1 in box A is less than the amount
reported on box 14 of the T4 issued for Quebec as you are allowed to take a deduction of 2 weeks salary.
What are the federal and provincial tax rates and how do i use them?
Since each province has a different tax rate, moving from one province to another can have a significant impact
on your after tax income. The following amounts/rates are for the 2008 taxation year.
Federal tax is calculated, on Schedule 1 of your tax return, by applying a basic rate of 15% on the first $40,726
of taxable income. The next $40,726 of taxable income is subject to a rate of 22% and the next $44,812 of taxable
income is subject to a rate of 26%. The maximum rate of 29% is applied to any excess over $126,264 of taxable
income. The Basic federal tax is then calculated by subtracting non- refundable tax credits and, if applicable,
certain other credits or adjustments.
Under the current tax on income method, provincial tax for all provinces (except Quebec) and territories is
calculated in the same way as federal tax. Some provincial or territorial surtaxes and reductions might also apply.
For purposes of calculating the amount to withhold when a M/E is paid cash allowance, the table on the next page
shall be used. The amount withheld is based on a flat rate and will not exactly correspond with your individual tax
rate. In the event that too much tax is withheld, you will receive a refund or a reduction of taxes otherwise payable
when you file your annual tax return.
note: For Quebec there is another deduction for Parental Insurance Plan of 0.45%.
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Tax Smart
Province
Federal Tax
Provincial Tax
EI
CPP/QPP
Total Tax
NL
26%
14.39%
1.73%
4.95%
47.07%
NS
26%
17.50%
1.73%
4.95%
50.18%
NB
26%
14.30%
1.73%
4.95%
46.98%
PEI
26%
16.70%
1.73%
4.95%
49.38%
QC
26%
24.00%
1.36%
4.95%
56.31%
ON
26%
11.16%
1.73%
4.95%
43.84%
MB
26%
17.40%
1.73%
4.95%
50.08%
SK
26%
15.00%
1.73%
4.95%
47.68%
AB
26%
10.00%
1.73%
4.95%
42.68%
BC
26%
14.70%
1.73%
4.95%
47.38%
YT
26%
12.76%
1.73%
4.95%
45.44%
NT
26%
14.05%
1.73%
4.95%
46.73%
NU
26%
11.50%
1.73%
4.95%
44.18%
Why have i received a T4 several years after my last move?
If you have used non-core funds to reduce the interest in your mortgage through the “Home Relocation
Loan” you have received a taxable benefit. The low interest loan earned in the previous calendar year calculated
by Group Mortgage Plan will be reported in box 36. This amount is included in box 14 and is used for reporting
purposes only. Although this amount is effectively not taxable because you are provided with an offsetting deduction
in box 37, the CRA rules state that this amount must still be reported as income.
When you complete your Tax return enter on line 248 the total of the amount shown in box 37 of your T4.
Please note that this amount is not captured in the system. It was provided by Group Mortgages Plan.
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