How to Respond to a CRA Audit on Moving Expenses

Moving Expenses for Work: A Key Focus of CRA Audits in Recent Years
Moving expenses related to work have become a major focus of CRA (Canada Revenue Agency) audits in recent years. This is due to the increased mobility of workers across Canada and the fact that claiming moving expenses directly reduces taxable income, lowering the amount of tax owed. As a result, nearly 95% of moving expense claims are audited, and even moving expenses from previous years could be reviewed. This article provides a brief guide on how to respond to a CRA audit of moving expenses.

How to Respond When You Receive a CRA Audit Notice

If you receive a CRA audit notice by mail or a notification in the “Mail” section of your CRA My Account, there’s no need to panic. CRA typically requests supporting documents for the claimed moving expenses, such as receipts for airfare, accommodation, and other expenses.

Here are some important tips and steps to follow:

1. Read the CRA Audit Notice Carefully
   Go through the letter word by word to understand exactly what CRA is requesting.
2. Prepare All Required Documentation
   Gather all the materials requested by CRA to ensure your submission is complete and accurate.

Documents Typically Required for a Moving Expense Audit

1. Receipts and Documentation for All Claimed Moving Expenses
   This includes, but is not limited to:
   • Airfare
   • Accommodation expenses
   • Bills from moving companies
   • Other related expenses (e.g., rental vehicles or fuel costs)
2. A Letter from the New Employer
   This demonstrates that the move was directly related to a new work opportunity.
3. Proof of Address for the Previous Residence
   Examples include:
   • Utility bills
   • Rental agreements
   • Phone bills
   • Other documents verifying the address of your previous residence

Key Reminders

Since each audit may have different requirements, it’s crucial to carefully read and understand the CRA audit notice and provide the specific documents requested within the required timeframe.

By following these steps, you can effectively respond to a CRA audit of moving expenses, ensure your claims are legitimate, and avoid unnecessary complications.