TAXABLE BENEFITS FOR MILITARY PERSONNEL
As military personnel, you are eligible for relocation benefits that may be taxable. This information is intended to help you understand which relocation benefits are deemed taxable by Canada Revenue Agency (CRA). This information is meant as a guide only and does not supersede CRA regulations.
What you are eligible or not eligible to claim on your personal income tax return will depend upon your particular circumstances and members should refer to CRA regulations for confirmation. For the official CRA regulations please refer to the Moving expenses and relocation benefits section on Canada.ca. You may access a CRA move expenses claim form (T1-M Moving Expenses Deduction Form) and additional information pertaining to Line 219 on your income tax return by visiting the link to Line 219 – Moving Expenses.
Taxable or Non-taxable Benefit:
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 have been excluded from taxation. The taxable benefits received from your employer due to relocation will appear on your T4/RL1. For example, if you receive $1000 worth of taxable benefits, then you will be responsible to pay taxes on this amount at your marginal tax rate as if it were additional income.
For the most part, relocation benefits are not taxable as they are deemed a condition of employment. For any benefits that are not taxable as per CRA, you will simply receive these funds from your employer and they will not be included on your T4/RL1 slip.
CRA regulations stipulate that in order to receive a non-taxable benefit from your employer for relocation expenses:
- Your replacement residence must be at least 40 kilometres closer* (by using the shortest, direct, public route) to your new place of duty than your original residence was; and
- Your employer must collect the required documentation to support any amounts paid to you.
* Relocations that do not meet the “40 km rule” in the first bullet above but fall under article 1.1.03, “Eligibility Application” in the CF IRP Directive are entitled to receive non-taxable benefits under that directive.
Deductible or Non-deductible Benefit:
In some cases, you may incur expenses during your relocation that are not paid or reimbursed to you by your employer. Some of these expenses may be considered by CRA to be eligible for a tax deduction. If eligible, the expense may be deducted from your employment income by way of a Form T1-M attached to your personal income tax return.
In general, only moves within Canada are eligible unless the individual making the foreign move is still considered to be a Canadian resident. A Guide to Relocation Benefits Tax Implications– 2018 Taxation year.
The following tables are intended to show you which the Canadian Forces Integrated Relocation Program Directive (CF IRP) benefits are taxable and non-taxable. The tables also list which benefits that if not reimbursed by your employer, may qualify as a deduction on your personal income tax return.
For example, if you are eligible to receive a benefit that is reimbursable from your Custom/Personalized fund but your funding envelope is not large enough to cover the full amount, this expense may be “deductible” as indicated and the T1-M form may be added to your Income Tax return.