Question: “My husband accepted a job that has him living and working in Alberta while our family home is in British Columbia. He rents a hotel by the week while he is working and receives a living allowance from his employer to cover his expenses while he is away. However, the allowance does not quite cover the costs. Will he be able to claim any moving expenses? Will he be able to claim any work expenses over his living allowance? Will he be able to choose his province for taxation?”
These are excellent questions. I’ll address each of the issues in sequence.
Normally your province of residence for income tax purpose is where you were living on December 31st of the tax year. However, in this case the determining fact will be the location where he ordinarily resides. The determining factor here would be where you reside, the family home is, bank accounts etc. It would appear the province of residence would be British Columbia.
Moving expenses are deductible if there is an official move of ore than 40 KM closer to the place of employment. This would involve moving the family home to Alberta near where your husband works.
The receipt of the allowance itself must be included in income as employment income. If certain conditions outlined in the next section are met, then deductions may be claimed for the travel expenses. However, the allowance would not be taxable if it were reasonable and was to cover costs to work away from the location where the employer is normally located.
Travel & Motor Vehicle Expenses
Travel and motor vehicle expenses may be deducted under subsections 8(1)(h) and 8(1)(h.1) of the Income Tax Act respectively. To make a claim under these provisions of the act your husband must meet the following conditions:
1. He must be required to pay his own travel expenses, accommodation expenses, and motor vehicle expenses as well as have a T2200 signed by his employer.
2. He must be ordinarily be required to carry out his duties away from the employer’s place of business.
3. He must not be in receipt of an allowance.
If the first two conditions are met, we could assume that the allowance is not taxable. In this case he may claim that the allowance was unreasonable, add the value of the living allowance to his income, and claim deductions for travel and motor vehicle expenses.
The above assumes that your husbands’ employer is local but he is required to work away from their normal business location. If the circumstances are different then the tax result could be different as well. I would strongly suggest that your husband meet with an accountant in your area to discuss your circumstances.