Tax - Ch9 Solutions - CHAPTER 9 OTHER INCOME OTHER...

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CHAPTER 9: OTHER INCOME, OTHER DEDUCTIONS, AND SPECIAL RULES FOR COMPLETING NET INCOME FOR TAX PURPOSES Solutions to Key Concept Questions KC 9-6 [ITA: 62; IT-178R3 – Moving expenses] Moving expenses in respect of an eligible relocation are deductible. The deduction is limited to the income earned at the new location which in this case is $30,000 [ITA 62(1)]. The move from Ottawa to Toronto is an eligible relocation as defined in ITA 248 – The relocation occurred to enable Norman to be employed at a new work location in Canada, His old home and his new home are both in Canada, and His new home is at least 40 km closer to the new work location than his old home would be. Norman’s deductible moving expenses total $34,445 as calculated below. His deduction for the current year is limited to $30,000 (Norman’s income from his new work location). The excess can be carried forward and deducted next year. ITA 62(3)(a) travel costs in the course of moving Norman and members of his household from the old house to the new house - $418. Travel expenses can optionally be calculated under the simplified method without receipts: $17/meal (up to $51/day per person) and vehicle expenses based on a prescribed amount per km for the province in which the move starts [the prescribed amounts for each province can be found at www.cra.gc.ca/travelcosts ]]. Actual cost (receipts required) $210 Simplified method: Meals - $17 x 2 meals x 5 people $170 Car - $0.55 (Ontario rate) x 450 km 248 $418 ITA 62(3)(b)
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