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When you sell your home – claiming the principal residence exemption in 2026 (August 2026)

As is commonly known, the purchase of a home represents the largest single financial transaction most Canadians will make in their lifetime. However, buying a home represents much more than a financial transaction, however large that transaction may be. The purchase of a home brings with it a sense of both accomplishment and security, as well as the opportunity to build equity in that property over the long term.

In addition to building equity, of course, most home purchasers buy with the expectation that the value of their home will increase over the long term. That’s an expectation that is virtually always realized: while the real estate market always has its ups and downs over everyone’s period of home ownership, the cost of property always increases over the long term.

That increase in the market value of their property is what many homeowners count on to provide not just current financial security, but a retirement nest egg – and often a source of income to supplement Canada Pension Plan and Old Age Security benefits during retirement.

Anyone who was fortunate enough to purchase a home more than 10 or 15 years ago likely now owns a property which has a current market value of many times more than the original purchase price. The real benefit of such asset growth, however, is found in the way such increases in value are treated for tax purposes.

The Canadian tax system is a very comprehensive one, and there are very few sources of employment, business, property, or investment income which escape the tax net. Home ownership is one of those few exceptions. Under general Canadian tax rules, where an asset is sold the increase in the value of that asset over its original purchase price is treated as a capital gain, 50% of which must be included in taxable income and taxed as such. However, where a family home is sold, any increase in value (that is, any gain) is exempt from tax – regardless of the amount of such gain – as long as the home has been used as what is known in tax parlance as a “principal residence” throughout the entire period of ownership. For example, a homeowner who paid $200,000 for a home in 2000 and sold that home in 2026 for $1,000,000 has a gain of $800,000. Assuming that the property was lived in and used as a principal residence for the entire 26 years of ownership, the full $800,000 gain can be received tax-free. If that gain were treated as a capital gain, and taxed as such, approximately $200,000 of the gain would have to be paid as tax on the transaction.

The tax-free status of gains made on the sale of a family home is known in our tax system as the principal residence exemption (PRE), and that exemption has been available to Canadians for many decades. For many years after the introduction of the PRE there were no changes made to the rules governing the availability of the exemption, or the reporting requirements for claiming it. Over the past ten years, however, and especially in 2023, the rules with respect to the availability of the exemption were tightened.

The need for the 2023 changes arose out of a perceived change in the way the housing market operated, resulting from unprecedented increases in the price of residential properties over a relatively short period of time. While there are have always been individuals or companies who purchased properties with the intent of reselling them, perhaps after undertaking renovations, most purchases of residential real estate were made by individuals or families intending to live in them. However, in some Canadian real estate markets over the past 10 or 15 years, it was possible to purchase a property and re-sell it relatively soon thereafter for a very substantial profit. And, where the PRE was claimed on that sale, the entire profit would be received tax-free.

These changes in the housing market led to what the federal government perceived as a situation in which housing was being bought and sold as a commodity rather than for its traditional purpose of providing a home, and that the PRE was being used to avoid the payment of profits made from the “flipping” of properties in a way that was never intended. A secondary effect of such “commodification” of residential real estate was to drive up the price of properties, putting home ownership further and further out of reach for the average Canadian, especially younger people.

For both these reasons, the federal government moved, in 2016 and again in 2023, to make changes to ensure that the principal residence exemption was being used for its intended purpose, and only by those who were entitled to claim it.

The first, smaller, change (which took effect beginning with the 2016 tax year) was an administrative measure which required taxpayers, for the first time, to report any transaction for which the PRE was being claimed. Since then, individuals who are claiming the PRE for a property sale which took place during the year are required to report the sale on Schedule 3, Capital Gains or Losses and must, in addition, complete Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust), designating the particular property as their principal residence.

The second change made by the federal government with respect to the PRE was much more substantive, and aimed directly at those who, in the government’s view, had been misusing the PRE. That change, which took effect beginning in 2023, provides that anyone who sells a residential property which they have owned for less than 365 days is considered to be “flipping” properties. Where that is the case, 100% of any gain made on the sale of the property is included in income and taxed as business income. In other words, not only would the seller of the property not be able to claim the PRE, the gains made on the sale of the property would not be treated as a capital gain (only half of which is included in income for tax purposes) but as business income, the entirety of which is included in income and taxed as such.

The difference in the tax result is best illustrated using the example above. An individual who purchases a property for $200,000 and sells that property for $1,000,000 has a gain of $800,000. The result of the different possible tax treatments of that gain is as follows:

Where the sale is fully eligible for the principal residence exemption, the total tax payable on the gain is $0;
Where the gain is treated as a capital gain, the total tax payable on that gain is around $200,000; and
Where the property sale takes place after 2022, the property was owned for less than 365 days, and the transaction is treated as property flipping, the new rule will apply and the total tax payable on the gain will be about $400,000.

Of course, while most Canadians who purchase a home to live in as a principal residence don’t intend to sell within a year of purchase, life’s circumstances can sometimes dictate a different outcome. Consequently, the rules provide for exemptions from the tax consequences of selling within 365 days of purchase. Generally, those exemptions are available where Canadian homeowners sell their home due to certain specified life events.

The current reporting rules require that anyone who sells a residential property during the year, has owned that property for 365 days or longer, and is claiming the principal residence exemption must report that sale on Part 2 of Schedule 3 of their return for that year. In that section, the taxpayer is required to designate the property which has been sold as their principal residence (while also providing detailed information on that property on Form 2091 (IND)), and to indicate the number of years during the period of ownership the property was used as a principal residence. Where, as is most often the case, the number of years of ownership will be identical to the number of years that the property was used as a principal residence, the entire gain realized on the sale of the property will qualify for the principal residence exemption and therefore be non-taxable.

Where a taxpayer has sold a residential property during the year and that sale took place within 365 days of the date of acquisition of that property, the taxpayer must complete Part 1 of Schedule 3, to determine whether the sale does or does not constitute “property flipping”. The taxpayer is asked to indicate whether they sold a housing unit during the year, and within 365 days of acquiring it. Where the answer to that question is “yes”, the taxpayer can indicate whether the sale was “due to, or in anticipation of” any one or more of nine different “life events”.

That listing of “life events” is quite extensive, and includes all of the following:

the death of the taxpayer or a related person;
a related person joining the taxpayer’s household or the taxpayer joining a related person’s household (for example, moving in with a spouse or common-law partner, for the birth of a child, adoption, or care of an elderly parent);
the breakdown of a marriage or common-law partnership where the taxpayer had been living separate and apart from their spouse or common-law partner for at least 90 days before the disposition;
a threat to the personal safety of the taxpayer or a related person (for example, domestic violence);
a serious disability or illness of the taxpayer or a related person;
the eligible relocation of the taxpayer or their spouse or common-law partner where the taxpayer’s new home is at least 40 kilometers closer to the new work location or school (generally, an eligible relocation allows the taxpayer to carry on business, be employed, or attend full-time post-secondary education);
the involuntary termination of employment of the taxpayer or their spouse or common-law partner;
the insolvency of the taxpayer; or
the destruction or expropriation of the taxpayer’s property (for example, when the property is destroyed due to natural or man-made disaster).

In addition, it is not necessary for such circumstances to have actually occurred prior to the sale; it is sufficient that the sale have taken place “in anticipation of” the particular life event or events. Where these criteria are satisfied, the sale of a residential property within 365 days of its acquisition will be considered to not constitute property flipping, and any gain realized on the sale can qualify for the principal residence exemption (assuming that the taxpayer actually used the property as a principal residence during the part-year that they owned it).

Most Canadians buy a property for the purpose of living in and using that property as a family home/principal residence and such individuals will not encounter any tax consequences when the property is eventually sold. Only in the relatively unusual case where a property is sold within 365 days of its acquisition do the rules apply to deny the homeowner access to the PRE, and then only where that homeowner cannot avail themselves of any of the “life circumstances” exemptions listed above. In the vast majority of cases, homeowners can be assured that the years of making mortgage payments and maintaining and/or making improvements to their home will be “rewarded” by receipt of a substantial financial gain, on which no tax is levied.

More information on the rules governing the sale of a principal residence and how to claim the PRE can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Claiming a deduction for legal fees incurred (August 2026)

Like most good professional advice, legal fees can be costly. And, adding insult to injury, the need to seek out and obtain legal advice (and to pay for it) is usually associated with life’s more unpleasant events – a divorce, a dispute over a family estate, or a job loss. About the only thing that mitigates the pain of paying legal fees (apart, hopefully, from a successful resolution of the problem that created the need for legal advice) would be being able to claim a tax credit or deduction for the fees paid.

Unfortunately, while there are some circumstances in which such a deduction can be claimed, those circumstances don’t usually include the routine reasons – purchasing a home, getting a divorce, establishing custody rights, or seeking legal advice about making a will or managing a family estate – for which most Canadians incur legal fees. Generally, personal (as distinct from business-related) legal fees become deductible for most Canadian taxpayers only where they are seeking to recover amounts which they believe are owed to them, particularly where those amounts involved employment or employment-related income or, in some cases, family support obligations.

The first situation in which legal fees paid may be deductible is that of an employee seeking to collect (or to establish a right to collect) salary or wages. Canadian employment standards laws provide that an employee who is about to lose their job (for reasons not involving fault on the part of the employee) is entitled to receive a specified amount of notice, or salary or wages equivalent to such notice. In many cases, however, the employee can establish a right to a period of notice (or payment in lieu) greater than the statutory minimum. The amount of notice or payment in lieu of notice which is payable can then become a matter of negotiation between the employer and its former employee, and such negotiations usually involve legal representation and consequently, legal fees. In that situation, legal fees incurred by the employee to establish a right to amounts allegedly owed by the employer are deductible by that former employee. If a court action is necessary and the Court requires the employer to reimburse its former employee for some or all of the legal fees incurred, the amount of that reimbursement must be subtracted from any deduction claimed. In other words, the former employee can claim a deduction only for legal fees which they were personally required to pay in order to collect wages or salary owed and for which they were not reimbursed.

In some situations, an employee or former employee seeks legal help in order to collect or to establish a right to collect a retiring allowance or pension benefits and, in such situations, the legal fees incurred can be deducted. The maximum available deduction available for legal fees incurred is the total amount of the retiring allowance or pension income actually received for that year, minus any amount transferred to a registered retirement savings plan or a registered pension plan. “Excess” legal fees that cannot be deducted in the current year can be carried forward and claimed in any of the next seven years.

The rules covering the deduction of legal fees incurred where an employee claims amounts from an employer or former employer are relatively straightforward. The same, unfortunately, cannot be said for the rules governing the deductibility of legal fees paid in connection with family support obligations. Those rules have evolved over the years in a somewhat piecemeal fashion, and the current rules are as follows.

Legal fees incurred by either party in the course of reaching a separation agreement or obtaining a divorce are not deductible. Such fees paid to establish child custody or visitation rights, or to seek equalization of family assets, are similarly not deductible by either parent.

Where, however, one former spouse has the right to receive support payments from the other, there are circumstances in which legal fees paid in connection with that right are deductible. Specifically, legal fees paid for the following purposes will be deductible by the person receiving the support payments:

to establish the amount of support payments from their current or former spouse or common-law partner;
to establish the amount of support payments from the legal parent of their child (who is not their current or former spouse or common-law partner) where the support is payable under the terms of a court order;
to seek an increase in support payments;
to defend against a reduction in support payments;
to collect late support payments owing; or
to request that child support payments be non-taxable.

On the payment side of the support payment/receipt equation, the situation is not nearly so favourable, as a deduction for legal fees incurred will generally not be allowed to a person paying support. More specifically, as stated in the Canada Revenue Agency publication on the subject, a payer of support “cannot deduct legal and accounting fees incurred to establish, negotiate, contest, reduce or terminate the amount of support payments”.

Finally, where the Canada Revenue Agency reviews or challenges income amounts, deductions, or credits reported or claimed by a taxpayer for a tax year, any fees (which in this case would also include accounting fees) paid for advice or assistance in dealing with the CRA’s review, assessment, or reassessment, or in objecting to that assessment or reassessment, can be deducted by the taxpayer. A deduction can similarly be claimed where the taxpayer incurs such fees in relation to a dispute involving Employment Insurance, the Canada Pension Plan, or the Québec Pension Plan.

The final hurdle to be faced by a taxpayer seeking to claim a deduction for legal fees incurred is figuring out where on their income tax return such a deduction can be claimed. Unlike many other expenditures for which a tax deduction is available, there is no single line on the federal income tax return specifically for the claiming of a deduction for legal fees. Rather, there are several such lines, and which line the taxpayer should use in claiming a deduction depends on the purpose for which the legal expenses were incurred. The rules are as follows:

Line 22100 – claiming a deduction for legal expenses incurred by a recipient of support payments;
Line 22900 – claiming a deduction for legal expenses incurred to collect salary or wages owed to the taxpayer;
Line 23200 – claiming a deduction for legal expenses and/or accounting fees incurred to respond to a CRA assessment or reassessment of income, deductions, or credits, or entitlement under the Canada Pension Plan, the Québec Pension Plan, or Employment Insurance program;
Line 23200 – claiming a deduction for legal fees incurred to collect or establish a right to a retiring allowance or pension benefit.

Detailed information on the often confusing rules which govern the deduction of legal fees incurred is available on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-23200-other-deductions.html#toc2.

The CPP post-retirement benefit - deciding whether to continue contributing (August 2026)

In 1966, Canadian workers began contributing for the first time to a new government sponsored retirement income plan – the Canada Pension Plan. Today, 60 years later, retirement for most Canadians bears little or no resemblance to the way retirement looked in 1966. At that time, retirement followed a predictable path – nearly all workers left a full-time position to retire completely at age 65, at which time they often started to receive monthly payments from an employer-sponsored pension plan.

Retirement has changed in at least three important ways since then. First, retirement is no longer one-size-fits-all, and retirement plans (and the age at which retirement starts) are now different for almost every individual. Second, retirement is now more often a process than an event. Rather than complete retirement from full-time employment at age 65, Canadians often gradually reduce their work commitment from full-time to part-time, while others retire from a full-time position and take up part-time work in a different field. Sometimes that part-time work is done to keep busy and maintain a sense of social connection, while in other cases it’s done out of financial necessity. Finally, while most workers in 1966 could look forward to regular payments from an employer-sponsored pension plan, that hasn’t been the reality for Canadian workers (especially private sector workers) for some time.

When retirement for most Canadians changes, retirement income systems and plans must inevitably change to meet the evolving needs of retirees – and they have. The increasingly flexible nature of retirement plans is reflected in changes made over the past fifteen years to the Canada Pension Plan.

Every Canadian worker (employed or self-employed) who earns more than a threshold amount of income during the year (that amount is currently $3,500) must contribute to the Canada Pension Plan, starting at age 18 and continuing throughout their working life, or until the month in which they turn 70. The amount of contributions made is based on the individual’s income for the year, and total contributions made will determine the amount of CPP retirement benefit for which the individual will be eligible.

It’s possible to begin receiving CPP retirement benefits as early as age 60 and as late as age 70, with the amount of benefit increasing with each month that receipt of benefits is deferred past age 60. Many Canadians now choose to begin receiving their CPP retirement benefit while continuing to participate, part-time or full-time, in the work force.

At one time, beginning to receive CPP retirement benefits meant that, even for those who chose to remain in the work force, no further CPP contributions were allowed. In 2012 that changed, with the introduction of the CPP Post-Retirement Benefit, or PRB. The availability of the PRB means that those who are aged 65 to 69 and continue to work while receiving CPP retirement benefits must decide whether or not to continue making CPP contributions. Such individuals who make the choice to continue to contribute to the Canada Pension Plan will see an increase, as the result of the PRB, in the amount of CPP retirement benefit they receive each month for the remainder of their lives.

The rules governing the availability of the PRB differ, depending on the age of the taxpayer. In a nutshell, an individual who is receiving the CPP retirement benefit and who continues to work will be subject to the following rules:

Individuals who are 60 to 64 years of age and continue to work are required to continue making CPP contributions.
Individuals who are 65 to 69 years of age and continue to work can choose not to make CPP contributions. To stop contributing, such an individual must fill out form https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/cpt30.html. A copy of that form must be given to the individual’s employer and the original sent to the Canada Revenue Agency (CRA). An individual who has more than one employer must make the same choice (to continue to contribute or to cease contributions) for all employers and must provide a copy of the CPT30 form to each employer.

A decision to stop contributing can be changed, and contributions resumed, but only one such change can be made per calendar year. To make that change, the individual must complete section D of CRA form https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/cpt30.html, give one copy of the form to their employer(s), and send the original to the CRA.
Individuals who are over the age of 69 and are still working cannot contribute to the CPP.

For individuals aged 65 to 69 who are still working, a decision on whether to continue making CPP contributions is, essentially, a cost/benefit analysis – each individual must determine whether the cost of making such contributions is justified by the increase in CPP retirement benefits which will result. To make that calculation, it’s necessary to start by knowing how much continuing contributions will cost.

For 2026, the rules for contributions to the CPP are as follows.

Each employee contributes first tier contributions of 5.95% of income between $3,500 and $74,600, to a maximum first tier CPP contribution amount of $4,230.45.
Individuals who have employment or self-employment income of more than $74,600 will be required to pay additional CPP contribution amounts of 4% of income between $74,600 and $85,000, with the maximum second tier contribution amount (for employees) being $416.00.
For self-employed individuals (who must pay both the employer and employee portions of CPP contributions), the maximum first tier CPP contribution in 2026 will be $8,460.90 and the maximum second tier contribution will be $832.

For individuals who are trying to decide whether to continue contributing to the CPP, there are some general rules of thumb which can be useful in making that determination. Generally speaking, continuing to contribute makes the most sense for younger individuals whose current CPP retirement pension is significantly less than the maximum allowable benefit (which, in 2026, is $1,507.65 per month), as making such contributions will mean an increase in the individual’s CPP retirement benefit each month for the rest of their life. Conversely, for individuals who are already receiving the maximum CPP retirement benefit, or even close to it, there is likely little or no benefit to be derived from continuing to contribute. Self-employed individuals will need to factor in the reality that they will be required to pay both the employer and employee contribution amounts. And, finally, those whose income is more than $74,600 in 2026 will need to consider the additional cost of making second tier CPP contributions.

It can seem that analyzing the various factors which go into a decision on whether the continue to make CPP contributions requires the skills of an actuary. There is, however, a federal government resource which is provided free of charge and enables users to obtain an estimate of the amount of PRB which they can expect to receive in each subsequent year if they continue to contribute to the CPP. That Retirement Income Calculator (which is, in fact, a useful tool for anyone engaged in planning for retirement income) can be found on the federal government website at https://srv111.services.gc.ca/generalinfo/index.

Where an individual aged 65 to 69 decides that continuing to make CPP contributions makes sense in their circumstances, and the required forms are completed and submitted, the amount of any CPP post-retirement benefit earned will automatically be calculated by the federal government (no application is required), and the individual will be advised of any increase in the monthly CPP retirement benefit each year. The PRB will be paid to that individual automatically the year after the contributions are made, effective January 1 of that second year. Since the federal government doesn’t have all of the information needed to make such calculations until T4s and T4 summaries are filed by the employer by the end of February, the first PRB payment is usually made in a lump sum amount, in the month of April. That lump sum amount represents the PRB payable from January to April. Thereafter, the PRB is paid monthly and combined with the individual’s usual CPP retirement benefit in a single payment.

More information on the PRB generally is available on the same website at https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-post-retirement.html.

Getting help from the tax system for post-secondary education costs (August 2026)

Graduation from high school and the start of post-secondary education is an exciting time for both students and their families. Students who are beginning post-secondary education this fall are likely focused on choosing courses for the upcoming fall semester, getting a place in residence or finding a place off-campus, and generally anticipating the independence of life away from their family for the first time.

Parents, while undoubtedly proud of and excited for their recent graduate, are undoubtedly also contemplating the cost of all of this, because the hard reality is that all choices and decisions around post-secondary education come with a price tag – sometimes a very steep one. Regardless of geographic location, program choices, or housing arrangements, post-secondary learning is expensive. There will be tuition bills, of course, but also the need to find (and pay for) safe and convenient housing in what is, in many college or university locations, a very tight and very expensive rental market. Those who choose to live in a university residence and are able to secure a place in residence will also face bills for that accommodation and, often, for a meal plan.

Fortunately for students (and the parents who are likely footing much of the bill), there are tax credits, deductions, and benefits which can be claimed to help offset such costs. While some such tax credits have been eliminated in recent years, there are still post-secondary education costs for which an offsetting tax credit can be claimed. The most significant credits available to post-secondary students (or their spouses, parents, or grandparents) for the upcoming 2026-27 academic year are outlined below.

Tuition fees

A federal tax credit continues to be available for the single largest cost associated with post-secondary education – the cost of tuition. Any student who incurs more than $100 in tuition costs at an eligible post-secondary institution (which would include most Canadian universities and colleges) can claim a non-refundable federal tax credit equal to 14% of such tuition costs. Many of the provinces and territories also provide students with an equivalent provincial or territorial credit, with the rate of such credit differing by jurisdiction.

The charges imposed on post-secondary students under the heading of “tuition” include a myriad of costs which may differ, depending on the particular program or institution, and not all of those costs will qualify as “tuition” for purposes of the tuition tax credit. The following specific amounts do, however, constitute eligible tuition fees for purposes of that tax credit:

admission fees;
charges for use of library or laboratory facilities;
exemption fees;
examination fees (including re-reading charges) that are integral to a program of study;
application fees (but only if the student subsequently enrolls in the institution);
confirmation fees;
charges for a certificate, diploma, or degree;
membership or seminar fees that are specifically related to an academic program and its administration;
mandatory computer service fees; and
academic fees.

Charges imposed for the following items, however, do not constitute tuition fees for purposes of the tuition tax credit:

extracurricular student social activities;
medical expenses;
transportation and parking;
board and lodging;
goods of enduring value that are to be retained by students (such as a microscope, uniform, gown, or computer);
initiation fees or entrance fees to professional organizations, including examination fees or other fees (such as evaluation fees) that are not integral to a program of study at an eligible educational institution;
administrative penalties incurred when a student withdraws from a program or an institution;
the cost of books (other than books, compact disks, or similar material included in the cost of a correspondence course given by a Canadian educational institution); and
courses taken for purposes of academic upgrading to allow entry into a university or college program, as such courses are not considered to be at the post-secondary school level.

Certain other ancillary fees and charges, such as health services fees and athletic fees, may also count as eligible tuition fees. However, a tuition tax credit can be claimed only for up to $250 in such fees and charges, unless the fees are required to be paid by all full-time students or by all part-time students.

At both the federal and provincial levels, the tuition tax credit is a non-refundable one, meaning that it can reduce or eliminate tax otherwise payable, but cannot create or increase a tax refund. Where, as is often the case, a student doesn’t have tax payable for the year because their income isn’t high enough (or doesn’t have sufficient tax payable to use up any available tuition tax credit), credits earned can be carried forward and claimed by the student in any future tax year or transferred (within limits) in the current year to be claimed by a spouse, parent, or grandparent.

Rent, food, and other personal and living expenses

Unfortunately, although housing and food costs will take up a very big chunk of each student’s budget, there is not (and never has been) a tax deduction or credit which is claimable for such costs. In all cases, living costs incurred by a post-secondary student (whether on campus or off) are characterized as personal and living expenses, for which no tax deduction or credit is allowed.

Student debt

Most post-secondary students in Canada must incur some amount of debt (usually from a federal or provincial student loan program) in order to complete their education, and repayment of such debt is typically not required until after graduation. Once repayment starts, a 14% federal tax credit can be claimed for the amount of interest paid during the year on government student loan debt, and the credit claimable for such interest amounts paid can be carried forward and claimed in any of the five subsequent tax years. And while other types of credits related to post-secondary education (like the tuition tax credit) can be transferred to and claimed by other family members, the student loan interest tax credit can be claimed only by the student – no transfer of the credit is allowed.

Students who are still in school and arranging for loans to finance their education should be mindful of the rules which govern that student loan interest tax credit, since decisions made while still in school with respect to how post-secondary education will be financed can have tax consequences down the road, after graduation. That’s because while interest paid on a qualifying student loan is eligible for the credit, only some types of student borrowing will qualify for that credit. Specifically, only interest paid on government-sponsored (federal or provincial) student loans will qualify for the credit. Interest paid on loans of any kind from any financial institution will not.

It’s not uncommon (especially for students in professional programs, like law or medicine) to be offered lines of credit by a financial institution, often at advantageous or preferential interest rates. As well, financial institutions sometimes offer, once a student has graduated and begun to repay a government-sponsored student loan, to consolidate that student loan with other kinds of debt, also at advantageous interest rates. However, it should be kept in mind that interest paid on that line of credit (or any other kind of borrowing from a financial institution which is used to finance education costs) will never be eligible for the student loan interest tax credit.

As explained in the Canada Revenue Agency publication on the subject: “The interest claimed must only be interest on the student loan and not on any other type of loan, or paid on a student loan that has been combined with any other loan. If you renegotiated your student loan with a bank or another financial institution, or included it in an arrangement to consolidate your loans, you cannot claim this interest amount.” In other words, where a government student loan is combined with other debt and consolidated into a borrowing of any kind from a financial institution, the interest on that government student loan is no longer eligible for the student loan interest tax credit.

Students who are contemplating borrowing from a financial institution rather than getting a government student loan (or considering a consolidation loan which incorporates that government student loan amount) must remember, in evaluating the benefit of any preferential interest rate offered by a financial institution, to take into account the loss of the student loan interest tax credit on that borrowing in future years.

Other credits and deductions

The tax credits outlined above are those which are specific to the particular costs incurred by students enrolled in post-secondary education. There are, however, other credits and deductions which, while not specifically education-related, are frequently claimed by post-secondary students (for instance, a deduction claimed for moving costs). The Canada Revenue Agency publishes a very detailed and comprehensive guide which summarizes most of the rules around income, deductions, and tax credits which are of relevance to post-secondary students. The current version of that guide (P105 Students and Income Tax, which was last updated in December 2025) can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p105.html.

Making the RRSP decision when you turn 71 (July 2026)

One’s 71^st birthday is a very consequential event when it comes to retirement planning for Canadian taxpayers, and it’s an event which will be experienced by hundreds of thousands of Canadians during 2026.

While saving for retirement through an employer-sponsored pension plan used to be the “norm”, that hasn’t been the reality for most working Canadians for some time. Most Canadians, certainly those who work in the private sector, have for decades been saving for retirement through contributions to a registered retirement savings plan (RRSP). And, regardless of the amount saved or whether the planholder is retired, partly retired, or still in the full-time work force, every RRSP holder who reaches the age of 71 this year will be required, by the end of 2026, to make a decision on how to structure and invest their retirement income funds for the remainder of their lives.

The need to make that decision arises from the rule that all taxpayers who hold funds within an RRSP are required to collapse that RRSP by the end of the calendar year in which they turn 71 years of age – no exceptions, and no extensions. It’s a hugely consequential decision, as the course of action chosen will affect the individual’s income for the remainder of their life and, in some cases, actions taken cannot be undone.

While the actual decision is a complex one, there are actually only three options available to a taxpayer who must collapse an RRSP. They are as follows:

collapse the RRSP and include all of the proceeds in income for that year;
collapse the RRSP and transfer all proceeds to a registered retirement income fund (RRIF); and/or
collapse the RRSP and purchase an annuity with the proceeds.

It’s not hard to see that the first option doesn’t have much to recommend it. Collapsing an RRSP without transferring the balance to a RRIF or using that amount to purchase an annuity means that every dollar in the RRSP will be treated as taxable income for that year. In some cases, where a substantial six figure amount has been saved in the RRSP, that can mean losing nearly half of the RRSP proceeds to income tax. And, while any balance of proceeds left can then be invested, tax will be payable on all investment income subsequently earned.

As a practical matter, then, the choices come down to two: a RRIF or an annuity. And, as is the case with most tax and financial planning decisions, the best choice will be driven by one’s personal financial and family circumstances, risk tolerance, cost of living, and the availability of other sources of income to meet such living costs.

The annuity route has the great advantages of simplicity and certainty. In exchange for a lump sum amount paid by the taxpayer, the annuity issuer agrees to pay that taxpayer a specific sum of money, usually once a month, for the remainder of their life. Annuities can also provide a guarantee period, in which the annuity payments continue for a specified time period (five years, 10 years) even if the taxpayer dies during that time. Finally, annuities can be set up as joint annuities, in which annuity payments will continue until the death of the last annuitant – such joint annuities are most often purchased by spouses. Regardless of how the annuity is structured, the amount of monthly income which can be received is determined by the amount used to purchase the annuity, the gender and, especially, the age of the annuity purchaser(s), and the prevailing interest rates at the time the annuity is purchased.

For taxpayers whose primary objective is to obtain a guaranteed life-long income stream without the responsibility of making any investment decisions or the need to take any investment risk, an annuity can be an attractive option. There are, however, some potential downsides to be considered. First, an annuity arrangement can never be reversed. Once the taxpayer has signed the annuity contract and transferred the funds, they are locked into that annuity arrangement for the remainder of their life, regardless of any change in circumstances that might mean an annuity is no longer suitable. Second, unless the annuity contract includes a guarantee period, there is no way of knowing how many payments the taxpayer will receive. If they die within a short period of time after the annuity is put in place, there is usually no refund of amounts invested – once the initial transfer is made at the time the annuity is purchased, all funds transferred belong to the annuity company. Third, most annuity payment schedules do not keep up with inflation – while it is possible to obtain an annuity in which payments are indexed, having that feature will mean a substantially lower monthly payout amount. Finally, where the amount paid to obtain the annuity represents most or all of the taxpayer’s assets, entering into the annuity arrangement means that the taxpayer will not be leaving an estate for their heirs.

The second option open to taxpayers is to collapse the RRSP and transfer the entire balance to a registered retirement income fund, or RRIF. A RRIF operates in much the same way as an RRSP, with two major differences. First, it’s not possible to contribute funds to a RRIF. Second, the taxpayer is required to withdraw an amount from their RRIF (and to pay tax on that amount) each year. That minimum withdrawal amount is a percentage of the outstanding balance, with that percentage figure determined by the taxpayer’s age at the beginning of the year. For RRIF holders who are 71 at the start of the year, the required withdrawal percentage is 5.28% – and it increases in each subsequent year. While the taxpayer can always withdraw more in a year (and pay tax on that withdrawal), they cannot withdraw less than the minimum required withdrawal for their age group.

Where a taxpayer holds savings in a RRIF, they can invest those funds in the same investment vehicles that were used while the funds were held in an RRSP. And, as with an RRSP, investment income earned by funds held inside a RRIF are not taxed as they are earned. While the ability to continue holding investments that can grow on a tax-sheltered basis provides the taxpayer with a lot of flexibility, that flexibility has a price in the form of investment risk. As is the case with all investments, investments held within a RRIF can increase in value – or decrease – and the taxpayer carries the entire investment risk. When things go the way every investor wants them to, investment income is earned while the taxpayer’s underlying capital is maintained, but that result is never guaranteed.

On the death of a RRIF annuitant, any funds remaining in the RRIF can be transferred to a RRIF of the surviving spouse without payment of tax. Where there is no surviving spouse, the balance of funds in the RRIF will be treated, for tax purposes, as income to the RRIF annuitant in the year of death, and must be reported as income on the tax return for that year.

While the above discussion of RRIFs versus annuities focuses on the benefits and downsides of each, it’s not necessary, and in many cases not advisable, to limit the options to an either/or choice. It is possible to structure a retirement income plan to provide, to some extent, for both the seemingly irreconcilable goals of lifetime income security and capital (and estate) growth. Combining the two alternatives – annuity and RRIF – either now or in the future can go a long way toward satisfying both objectives.

For everyone, whether in retirement or not, spending is a combination of non-discretionary and discretionary items. The first category is made up mostly of expenditures for income tax, housing (whether rent or the costs of owing a house – even where the mortgage has been paid off, costs like property taxes and utilities must still be paid), food, insurance costs, and (especially for older Canadians) the cost of out-of-pocket medical expenses. The second category, that of discretionary expenses, includes entertainment, travel, and the cost of any hobbies or interests pursued. A strategy which utilizes a portion of RRSP savings to create a secure lifelong income stream to cover non-discretionary costs can help to remove the worry of outliving one’s money, while the balance of savings can be invested for growth and to provide the income to be used for non-discretionary spending.

Such a secure income stream to cover non-discretionary expenses can, of course, be created by the purchase of an annuity. As well, although most taxpayers don’t think of them in that way, the Canada Pension Plan and Old Age Security program have many of the attributes of an annuity, with the added benefit that both are indexed to inflation. By age 71, all taxpayers who are eligible for CPP and OAS will have begun receiving those monthly benefits. Consequently, in making the RRIF/annuity decision at that age, taxpayers should include in their calculations the extent to which CPP and OAS benefits will pay for their non-discretionary living costs.

As of July 2026, the maximum OAS benefit for most Canadians (specifically, those who have lived in Canada for at least 40 years after the age of 18) is about $752 ($827 for those aged 75 and older) per month. The amount of CPP benefits receivable by the taxpayer will vary depending on their work and contribution history, but for 2026, the maximum CPP retirement benefit which can be received at age 65 is $1,508. As a result, a single taxpayer who receives maximum CPP and OAS benefits at age 65 will have $27,120 in annual income ($2,260 per month). And, for a married couple, of course, the total annual income received from CPP and OAS can be about $54,240 annually, or $4,520 per month. While $27,000 a year isn’t usually enough to provide a comfortable retirement, for those who go into retirement in reasonable financial shape – meaning, generally, without any debt – it can go a long way toward meeting non-discretionary living costs. In other words, most Canadians who are facing the annuity versus RRIF decision already have a source of income which is both guaranteed for their lifetime and is indexed to inflation. Taxpayers who are considering the purchase of an annuity to create the income stream required to cover non-discretionary expenses should first determine how much of those expenses can already be met by the combination of their (and their spouse’s) CPP and OAS benefits. The amount of any needed annuity purchase can then be set to cover off any shortfall.

While the options available to a taxpayer at age 71 with respect to the structuring of future retirement income are relatively straightforward, the number of factors to be considered in assessing those options and making that decision are not. All of that makes for a situation in which getting independent professional financial advice on the right mix of choices and investments is a very good strategy.

How to respond to a first Instalment Reminder from the Canada Revenue Agency (July 2026)

By the time summer arrives, nearly all Canadians have filed their income tax returns for the previous year, have received a Notice of Assessment from the tax authorities with respect to that return, and have either spent their tax refund or, more grudgingly, paid any balance of tax owing.

It’s a surprise, therefore, when unexpected mail arrives from the Canada Revenue Agency (usually in late July or early August), and the information in that mail will likely be both unfamiliar and unwelcome. Specifically, the enclosed Instalment Reminder form will advise the recipient that they are advised to make instalment payments of income tax on September 15 and December 15 of 2026 – and will helpfully identify the amounts which should be paid on each date.

No one particularly likes receiving unexpected mail from the tax authorities, and correspondence which suggests that the recipient should be making payments of income tax for 2026 to the CRA during the year (instead of when they file the return for 2026 in April 2027) is likely to be both perplexing and somewhat alarming. It’s fair to say that most Canadians aren’t familiar with the payment of income tax by instalment payments, and are therefore at a loss to know how to proceed the first time they receive an Instalment Reminder.

The reason that the instalment payment system is unfamiliar to most Canadians is that most of us pay income taxes during our working lives through a different system. Every Canadian employee has tax automatically deducted from their paycheque (“at source”), before that paycheque is issued, and that tax is remitted by the employer to the CRA on the employee’s behalf. Such deductions and remittances accrue to the employee’s benefit, and they are credited with those remittances when filing the annual tax return for that year. It’s an efficient system, but it’s also one which is largely invisible to the employee, and certainly one which operates without the need for the employee to take any steps on their own.

Where an individual is no longer an employee – for instance, they start a business and becomes self-employed, or retire and begins to receive retirement income from various government and non-government sources – such deductions and remittances are no longer automatically made. However, Canadian tax rules provide that, where the amount of tax owed when a return is filed by the taxpayer is more than $3,000 ($1,800 for Québec residents) in the current (2026) year and either of the two previous (2024 or 2025) years, that taxpayer may be subject to the requirement to pay income tax by instalments.

The reason that first instalment reminders are issued in late July or early August has to do with the schedule on which Canadians file their tax returns. The amount of tax payable on filing for the immediately preceding year can’t be known until the tax return for that year has been filed and assessed, and the tax return filing deadline for individuals is April 30 (or June 15 for self-employed taxpayers and their spouses). Consequently, by the end of June, the CRA will have the information needed to determine whether a particular taxpayer should receive a first instalment reminder for the current year

Taxpayers who receive that first Instalment Reminder in July may also be puzzled by the fact that it is a “Reminder” and not a “Requirement” to pay. The reason for that is that those who receive it are not actually required by law to make instalment payments of tax. There are, in fact, three options open to the taxpayer who receives an Instalment Reminder.

First, the taxpayer can pay the amounts specified on the Reminder, by the respective due dates of September 15 and December 15. A taxpayer who does so can be certain that they will not have to pay any interest or penalty charges even if they do have to pay an additional amount on filing in the spring of 2027. If the instalments paid turn out to be more than the taxpayer’s tax liability for 2026, they will of course receive a refund on filing.

Second, the taxpayer can make instalment payments based on the total amount of tax which was owed and paid for the 2025 tax year (including any balance that was owed on filing). If a taxpayer’s income has not changed between 2025 and 2026 and their available deductions and credits remain the same, the likelihood is that total tax liability for 2026 will be slightly less than it was in 2025, owing to the indexation of tax brackets and tax credit amounts, as well as a slight reduction in federal individual income tax rates for 2026.

Third, the taxpayer can estimate the amount of tax which they will actually owe for 2026 and can pay instalments based on that estimate. Where a taxpayer’s income has dropped from 2025 to 2026 and there will consequently be a reduction in tax payable, this option may be worth considering. Taxpayers who wish to pursue this approach can obtain the information needed to estimate current year taxes (federal and provincial tax brackets and rates) on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html#federal.

Where taxpayers choose to use option 2 or 3 rather than paying the amounts set out in the Instalment Reminder, they should be aware that the total amount to be paid is not divided equally between the September and December instalment payments. Rather, 75% of the total instalment amount for 2026 should be paid in the September instalment and the remaining 25% paid in the December instalment payment.

All of this may seem like a lot of research and calculation effort, especially when one considers that many Canadians don’t even prepare their own tax returns. And those who don’t want to be bothered with the intricacies of tax calculations can pay the amounts set out in the Instalment Reminder, secure in the knowledge that they will not incur any penalty or interest charges and that, should those amounts ultimately represent an overpayment of taxes, that overpayment will be refunded when the return for 2026 is filed next spring.

Once they have resigned themselves to the realities of the tax instalment system, the next question that most taxpayers have is how such payments can be made. The options open to taxpayers in that regard are helpfully outlined on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/making-payments-individuals/paying-your-income-tax-instalments/you-pay-your-instalments.html.

When the taxman has a few questions about your return (July 2026)

By the time summer arrives, the deadline for filing an individual income tax return for the previous year has come and gone for all individual Canadians. The majority of taxpayers were required to file that return for 2025 on or before April 30, 2026, while self-employed individuals (and their spouses) had until June 15, 2026 to complete that filing obligation. And, given the time frame during which the Canada Revenue Agency processes such returns and issues a Notice of Assessment, it’s likely that most if not all of those taxpayers have received their Notice of Assessment and concluded that their annual filing and payment obligations are done and behind them for another year.

For most taxpayers it is therefore surprising to receive a communication from the CRA in mid-summer, and more than a little unsettling to find out that the Agency has some further questions about the tax return that the taxpayer thought was already completed. Notwithstanding, that’s an experience that millions of taxpayers will have over the next few weeks and months.

Between February 6thand June 14 of this year, the Canada Revenue Agency received and processed just under 32 million individual income tax returns filed for the 2025 tax year, and issued a Notice of Assessment in respect of each one of those returns. The sheer volume of returns and the processing turnaround timelines mean that the CRA does not (and could not possibly) do a manual review of the information provided in a return prior to issuing the Notice of Assessment. Rather, returns are scanned by the Agency’s computer system and a Notice of Assessment is then issued.

In addition, the CRA has, for many years, been successful in encouraging taxpayers to fulfill their filing obligations online, through one of the Agency’s electronic filing services. This year, just under 30 million (or 93%) of individual returns for 2025 were filed by electronic means. While e-filing means that the turnaround for processing of returns is much quicker, there is, by definition, no “paper trail” involved.

The Canadian tax system has always been what is termed a “self-assessing” system, in which taxpayers report income earned and claim deductions and credits to which they believe they are entitled. Prior to the advent of e-filing there were means by which the CRA could easily verify claims made by taxpayers. Where returns were paper-filed, taxpayers were usually required to include receipts or other documentation to prove their claims, whatever those claims were for. For the 94% of returns which were filed this year by electronic means, no such paper trail exists. Consequently, the potential exists for misrepresentation of such claims (or simple reporting errors) on a large scale.

The CRA’s response to that risk is to conduct a wide range of review programs (there are, in fact, no fewer than eight separate tax return review programs utilized by the Agency), to ensure that information reported on each return was accurate and claims made for deductions and credits were justified. Some review programs are carried out before a Notice of Assessment is issued for the taxpayer’s return, and others after that Notice of Assessment has been issued and sent to the taxpayer. Regardless of the timing and the review program under which the review is carried out, in all cases the purpose of the review is to ensure that income amounts reported are complete and accurate and that deduction and tax credit claims made on the return can be verified by receipts or other documentation.

Being selected for review under any of the CRA’s review programs means, for the individual taxpayer, the possibility of receiving unexpected correspondence, or a telephone call, from the CRA. Receiving such correspondence or such a call from the tax authorities is almost guaranteed to worry the recipient taxpayer, who may immediately conclude that they have done something very wrong and are facing a big tax bill. However, in the vast majority of cases, the contact is just a routine part of the Agency’s processing review mandate.

Where the initial contact from the CRA to the taxpayer is done by telephone, it’s important that the taxpayer verify the identity of the person claiming to be a representative of the Agency. As virtually everyone knows by now, fraudulent or “scam” calls purporting to be from the CRA have become commonplace. To assist taxpayers in confirming that any telephone contact received is a legitimate one, the CRA has provided information on how to respond to such a call, and that information can be found on the CRA website at Verify it's the CRA calling - Scams and fraud - CRA - Canada.ca.

Most taxpayers, of course, are not concerned so much with the kind of program or programs under which they are contacted as they are with why their return was singled out for review or follow-up, and there are a number of reasons why that might have occurred.

One of the review programs administered by the CRA is the “Matching Program”, in which information reported on the taxpayer’s return (both income and deductions) is compared to information provided to the CRA by third-party sources (like T4s filed by employers or T5s filed by banks or other financial institutions). Where information provided by such a third party does not agree with the figures reported by the taxpayer on their return, the CRA is likely to want an explanation of the discrepancy.

As well, Canada’s tax laws are complex and, over the years, there are areas in which the CRA has determined that taxpayers are more likely to make errors on their return. Consequently, a return which includes claims in those areas (like dependant tax credit claims and claims for medical expenses, moving expenses, or tuition tax credits) may have an increased chance of being reviewed. Where there are deductions or credits claimed by the taxpayer which are significantly different or greater than those claimed in previous returns, that may attract the CRA’s attention. And, if the taxpayer’s return has been reviewed in previous years and, especially if an adjustment was made following that review, subsequent reviews may be more likely. Finally, many returns are picked for the processing review programs simply on the basis of random selection.

Regardless of the reason for the follow-up, the process is the same. Taxpayers whose returns are selected for review will be contacted by the CRA, usually by letter, identifying the deduction or credit for which the CRA wants documentation or the income or deduction amount about which a discrepancy seems to exist. The taxpayer will be given a reasonable period of time – usually a few weeks from the date of the letter – in which to respond to the CRA’s request. That response should be in writing, attaching, if needed, the receipts or other documentation which the CRA has requested. All correspondence from the CRA under its review programs will include a reference number, which is usually found in the top right-hand corner of the CRA’s letter. That number is the means by which the CRA tracks the particular inquiry, and should be included in the response sent to the Agency. It’s important to remember, as well, that it’s the taxpayer’s responsibility to provide proof, where requested, of any claims made on a return. Where a taxpayer does not respond to a CRA request or does not provide such proof, the Agency will proceed on the basis that the requested verification or proof does not exist and will assess or reassess accordingly.

Taxpayers who have registered for the CRA’s online tax program My Account (or whose representative is similarly registered for the Agency’s Represent a Client online service) can usually submit required documentation electronically. More information on how to do so can be found on the CRA website at Submitting documents online – Pre-assessment Review, Processing Review, Request Verification and Matching Programs - Canada.ca.

Whatever the reason a particular return was selected for review by the CRA, one thing is certain. A prompt response to the CRA’s enquiry, providing the Agency with the information or documentation requested, will, in the vast majority of cases, bring the matter to a speedy conclusion, to the satisfaction of both the Agency and the taxpayer. Detailed information on the return review process can be found on the CRA website at Review of your tax return by the CRA - Canada.ca.

Claiming a deduction for moving costs (July 2026)

While the Canadian housing market overall is down significantly from its peak in early 2022, houses continue to be bought and sold, and each such purchase and sale means a move for multiple households. The downturn in residential real estate prices has, in some instances, allowed first-time homebuyers to get into the market sooner than they might have expected. In other cases, however, it has meant that current homeowners who purchased during the pandemic, when prices were higher and interest rates were at historic lows, are finding the carrying costs for their mortgage at renewal to be unsustainable. In such cases, a sale of the house can be their best (or only) option. And, finally, every spring university students make the semi-annual trek from their university residences or apartments back to the family home for the summer, and then back to school again.

No matter the reasons or circumstances for the move or the distance to the new location, all moves have two things in common – stress and cost. Even where the move is a desired one, moving inevitably means upheaval of one’s life, and the costs involved can be very significant. There is not much that can diminish the stress of moving, but the associated costs can be offset somewhat by a tax deduction which may be claimed for many of those costs.

While it’s common to the refer to the “moving expense deduction” as though it were available to all taxpayers in all circumstances, the fact is that there is actually no universally available deduction claimable for moving costs – in order to be tax deductible, such moving costs must meet specific criteria. Our tax system allows taxpayers to claim a deduction only where the move is made to get the taxpayer closer to their new place of work, whether that work is a transfer within the same company, a change in employers, or moving to run a business at the new location. Specifically, moving expenses can be deducted where the move is made to bring the taxpayer at least 40 kilometres closer to their new place of work. That requirement is satisfied where, for instance, a taxpayer moves from Halifax to Toronto to take that new job. It’s also met where a taxpayer is transferred by their employer to another job in a different location and the taxpayer’s move will bring them at least 40 kilometres closer to the new work location. It’s not met where an individual or family move up the property ladder by selling and purchasing a new home in the same town or city.

As well, it’s not actually necessary to be a homeowner in order to claim moving expenses. The list of moving-related expenses which may be deducted is basically the same for everyone – homeowner or tenant – who meets the 40-kilometre requirement. Students who move to take a summer job (even if that move is back to the family home) can also make a claim for moving expenses incurred where the overriding 40-kilometre requirement is met.

It's important to remember, however, that even where the 40-kilometre requirement is met, moving costs can be deducted only from income earned from employment or self-employment (business) – such costs cannot be deducted from other types of income, like investment income or employment insurance benefits.

The general rule is that a taxpayer can claim reasonable amounts that were paid for moving themself, family members, and household effects. In all cases, moving expenses can only be deducted from employment or self-employment income earned at the new location. Where the move takes place later in the year, and moving costs are significant, it’s possible that the amount of income earned at the new location in the year of the move will be less than deductible moving expenses incurred. In such instances, those expenses can be carried over and deducted from income earned at the new location in any future year.

Within the general rule, there are a number of specific inclusions, exclusions, and limitations. The following is a list of expenses which can be claimed by the taxpayer without specific dollar figure restrictions (but subject, as always, to the overriding requirement of “reasonableness”).

travel expenses, including vehicle expenses, meals, and accommodation, to move the taxpayer and members of their household to their new residence (note that not all members of the household have to travel together or at the same time);
transportation and storage costs (such as packing, hauling, movers, in-transit storage, and insurance) for household effects, including such items as boats and trailers;
costs for up to 15 days for meals and temporary accommodation near the old or new residences for the taxpayer and members of the household;
lease cancellation charges (but not rent) on the old residence;
legal or notary fees incurred for the purchase of the new residence, together with any taxes paid for the transfer or registration of title to the new residence (excluding GST or HST);
the cost of selling the old residence, including advertising, notary or legal fees, real estate commissions, and any mortgage penalties paid when a mortgage is paid off before maturity; and
the cost of changing an address on legal documents, replacing driving licences and non-commercial vehicle permits (not including insurance), and costs related to utility hook-ups and disconnections.

In a sellers’ real estate market, houses can sell almost as soon as they are put on the market. That’s not usually case right now, when it can take weeks or even months to find a buyer. When those are the circumstances, the homeowner might have to move to start that new job before the “old” house has sold. In that case, the taxpayer is entitled to deduct up to $5,000 in costs incurred for the maintenance of the old residence while it is vacant and on the market. Specifically, costs including interest, property taxes, insurance premiums, and heat and utilities expenses paid to maintain the old residence while it is vacant and efforts are being made to sell it may be deducted. If any family members are still living at the old residence, or it is being rented, no such deduction is available.

It may seem from the forgoing that virtually all moving-related costs will be deductible – however, there are some costs for which the Canada Revenue Agency (CRA) will not permit a deduction to be claimed, as follows:

expenses for work done to make the old residence more saleable;
any loss incurred on the sale of the old residence;
expenses for job-hunting or house-hunting trips to another city (for example, costs to travel to job interviews or meet with real estate agents);
expenses incurred to clean or repair a rental residence to meet the landlord’s standards;
costs to replace such personal-use items as drapery and carpets;
mail forwarding costs; and
mortgage default insurance.

To claim a deduction for any eligible costs incurred, supporting receipts must be obtained. While the receipts do not have to be filed with the return on which the related deduction is claimed, they must be kept in case the CRA wants to review them.

Anyone who has ever moved knows that there are an endless number of details to be dealt with. For some types of costs, the administrative burden of keeping track of (and retaining receipts for) such moving-related expenses can be minimized by choosing instead to claim a standardized amount. Specifically, the CRA allows taxpayers to claim a fixed amount, without the need for detailed receipts, for travel and meal expenses related to a move. Using that standardized, or flat rate, method, taxpayers may claim up to $23 per meal, to a maximum of $69 per day, for each person in the household. Similarly, the taxpayer can claim a set per-kilometre amount for kilometres driven in connection with the move; the per-kilometre amount ranges from 55.5 cents for Saskatchewan to 70.5 cents for the Yukon. In all cases, it is the province or territory in which the travel begins which determines the applicable rate.

These standardized travel and meal expense rates are those which were in effect for the 2025 taxation year – the CRA will be posting the rates for 2026 on its website early in 2027, in time for the tax filing season.

Once eligibility for the moving expense deduction is established, the rules which govern the calculation of the available deduction are not complex, but they are very detailed. The best summary of those rules is found on the form used to claim such expenses – the T1-M. The current version of that form can be found on the CRA’s website at T1-M Moving Expenses Deduction - Canada.ca, and more information (including links to rates for standardized meal and travel cost claims) is available at Line 21900 – Moving expenses - Canada.ca.

New Quarterly Newsletters (Q3 2026)

Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.