Can I deduct moving expenses if I relocate my home-based business in Ontario?

Moving expenses may be deductible under the federal Income Tax Act if you move at least 40 kilometres closer (measured by the shortest usual public route) to a new work location or business location. This applies to both employees and self-employed individuals. The deductible costs include transportation of household goods, travel expenses for the move, temporary living costs within limits, and certain costs of selling or acquiring a home.

For home-based self-employed individuals, the "new work location" is the business location itself — which, because you work from home, is wherever your new residence is. So if you move your household and your home office from one Ontario city to another, and the new home is at least 40 kilometres closer to clients or business activity, moving expenses may be deductible.

Moving deductions are applied against income earned at the new location and cannot exceed that income — any excess can be carried forward. The definition of deductible moving expenses and the conditions for eligibility are federal, so the same rules apply across provinces. Consulting a tax professional before deducting significant moving costs is advisable.