A taxpayer with a sole proprietorship moved from one province to another in the middle of 2022.
On the T2125 Part 1 - identification I updated the business address.
On the Info page under Residency Province / Territory of residence on December 31, 2022, I entered the new province.
Beneath that, I entered the date of the move, as well.
Are there any other areas on the income tax return that need updating regarding the move?
That might be all that is required to update the file. I would also review the T2203 and the two provincial 428MJ’s to make sure everything makes sense regarding the allocation of business income and any excess income.
Thank you for your helpful reply @snoplowguy - really appreciate it.
Regarding T2203:
Looking at T2203 - first part mentions allocating income - there’s no income to allocate.
Perhaps T2203 is not necessary?
Regarding 428MJ - I did a search for that and couldn’t locate it. (When I search it in taxcycle the program suggests T1206)
But it may not be applicable either because of the loss (no income)?
Correct… if there is no net income then there is no income to allocate, and no T2203 to file. Regarding the 428MJ’s I believe they only become live when there is multi-jurisdictional income.
For instance, if you played around and gave your client 10,000 in self employed earnings and he had income in Ontario and PEI then you would see data on the T2203 and you sould also be able to access the following 2 forms;
ON428(MJ)
PE428(MJ)
the 428MJ forms are prefixed by the 2 letters of the applicable province.
If the client has self employed losses then none of this is applicable.
Did you claim moving expenses?
No because the move was more for personal reasons as opposed to relocating the business.
Also, the business is run from home as opposed to a commercial location.
I’d advise you to consider claiming the moving expenses. I have researched the matter in the past and claimed moving expense for clients who moved their home based business from one city to another. By all means do your own research and seek other opinions, but I think you will find that such a move qualifies as long as it meets the distance requirement.
Regards,
Keith Jackson
Keith A. Jackson, CPA, CGA
Keith A. Jackson
Chartered Professional Accountant
839 Glenbrae Street
Oshawa, Ontario L1J 5E2
Telephone (289) 830-4590
I called the CRA in 2011 when I moved as a self employed work from home CPA and they said no. You are not moving for work so you can’t claim moving expenses.
@keith1
How do you justify the distance?
Work from home at first location - distance to work is to the spare bedroom/office - say 30 feet.
Work from home in second location - distance to work is to the spare bedroom/office - say 25 feet.
You must be minimum 40 km closer to work to claim Moving expenses, so this does not fly.
Using the questionnaire on the CRA website - for self-employed people - Question 1:
40 km closer to new work space than from old home.
You need to check the questionnaire I sent you - home office self-employed’s do not qualify for moving expenses.
Here’s the link - Select “Moved withing Canada” and the answer is extremely clear
dklassencga, I suggest you read the question again, and also the CRA guide and, if you’re feeling adventurous, the Income Tax Act . The new home must be at least 40 km closer to the new work than the old home was to the new work. The distance from the old home to the old work is irrelevant.
This is not my first rodeo.
Regards,
Keith Jackson
Keith A. Jackson, CPA, CGA
Keith A. Jackson
Chartered Professional Accountant
839 Glenbrae Street
Oshawa, Ontario L1J 5E2
Telephone (289) 830-4590
Yep …Christian 2010 TCC 458 is a good example.
Alternatively Court backs CRA in rejecting couple’s $54,000 moving expense claim | Financial Post published by Jamie Golombek today…brought the old case to mind, although there are others as well.
And a caution: you CANNOT do tax law via questionnaires and guidebooks. There are ONLY two authorities: The Income Tax Act and the Courts’ view(s) of that Act.
@keith1 It’s not my first rodeo either and I can read. Here’s the questionnaire, step by step:
Click on “You moved within Canada”
Your place of work is still in your home, so NO you did not move 40 km’s closer to the new place of work.
Any auditor from CRA will reject moving expenses when the business is only in the home, as is stated by the original poster.
Now if they are in say construction and moved for better prospects at working and the office is just for administrative purposes, of course moving can be taken. But that’s not what the original poster has said - @healthymanccc states it “was more for personal reasons” and “the business is run from home as opposed to a commercial location”.
Except that in Christian, the person’s business was in the home…selling Mary Kay, and TCC allowed it.
If I understand correctly, you seem to contend that the answer to the question “Was the new home that you established at least 40 kilometres closer to your new place of work or business than your previous home was?” should be “No”. The original poster did not identify the two provinces involved, but it seems more likely than not that the distance would be more than 40 km, in which case the correct answer would be “Yes”. Answer “Yes” and the CRA questionnaire will say “You are eligible to claim a deduction for moving expenses”.
If “any CRA auditor” were to contend that such a move was not an “eligible relocation” simply on the grounds that the taxpayer conducted business in the new residence I am 100% confident that I could refute that contention.
You stated:
Where does CRA or the Income Tax Act say that? Nowhere in the CRA questionnaire, and nowhere in the definition of “eligible relocation” in subsection 248(1) of the Income Tax Act is the distance between the old residence and the former work or business location mentioned. Nowhere in those places, or in section 62, or any other authoritative source I can find is a claim for the expenses of moving a home-based business ruled out. If you can point to such a source, please do. I am always willing to learn.
