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Moving can be very expensive, but, fortunately, the net out-of-pocket costs can be significantly reduced if you’re eligible to claim a tax deduction for your moving expenses on your personal tax return.

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To be eligible, you must meet strict requirements under the Income Tax Act, lest the Canada Revenue Agency challenge your deduction, which is what happened in a recent Tax Court case decided last month.

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But before jumping into the details of the case, let’s review the conditions for writing off your moving expenses.

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Under the Income Tax Act, you can deduct moving expenses if you moved for work, to run a business or to be a full-time student. The expenses can be deducted from the employment or self-employment income you earned at your new work location. To qualify, your new home must be at least 40 kilometres closer to your new work or school.

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But how is that 40-kilometre distance to be measured? That was the sole issue in a recent tax case that involved an Ontario resident employed in the investment management business who moved to Mississauga from Newmarket to be closer to his new employer in downtown Toronto.

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In 2020, the taxpayer spent and deducted nearly $130,000 of moving expenses. That might seem high, but keep in mind that eligible moving expenses can include the actual cost of the movers as well as other expenses such as real estate commissions and land transfer taxes.

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The CRA denied the taxpayer’s claim, saying the reduction in the travel distance was only 32.8 kilometres, not the minimum of 40. The taxpayer disagreed, saying his new home was 47.4 kilometres closer to his new job.

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Both parties confirmed that they relied upon Google Maps to obtain the travel distance and related data that informed their conclusions as to whether the distance of the move met or missed the required 40-kilometre threshold, yet came to different results.

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The taxpayer produced as evidence a series of Google Maps that detailed the software algorithm’s recommendation regarding the route he ought to choose based on the time of day (typically rush hour) each weekday.

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Four days of the week, from Monday to Thursday, the suggested homeward route directed the taxpayer to take a “western route” four days a week, but to take a slightly shorter route on Friday due to lighter traffic. The daily average each week was 47.4 kilometres closer to work.

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By contrast, the CRA agent, who was testifying virtually from her residence in a Vancouver suburb and thus likely unfamiliar with Greater Toronto Area traffic patterns, presented the CRA’s version of Google Maps that selected an “eastern route,” which yielded a shorter distance of only 32.8 kilometres.

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The judge wondered how it was possible that both parties, using the same computer software algorithm, came up with different routes. It turns out the CRA agent confirmed that she had conducted her Google Maps search using the geographical coordinates at approximately 4:45 p.m. Unfortunately, when the agent measured the distance on various streets and highways, she was uploading “real-time” traffic data from Ontario, but the “actual time” in Ontario was not 4:45 p.m., but 7:45 p.m. due to the three-hour time difference with British Columbia.