Understanding Net Eligible Income?

When you move to start a new job, business, or post-secondary program, the Canada Revenue Agency (CRA) may allow you to deduct eligible moving expenses. But there’s a catch—you can only deduct those expenses against something called net eligible income.

This matters because if you don’t have qualifying income in the year of your move, you may not be able to claim moving costs at all—or may need to carry them forward to a future year. Understanding what counts as net eligible income ensures your claim is both accurate and fully optimized.

Let’s walk through how CRA defines it, how to calculate it, and how it determines your deduction limit.

What Is Net Eligible Income?

Net eligible income is the amount of earned income at your new location that you can use to deduct moving expenses. It includes:

• Employment income from your new job

• Self-employment income from your business at the new location

• Taxable scholarship, bursary, or grant income if you're a full-time student

It does not include investment income, rental income, or employment insurance. The income must be earned after the move and connected to the reason you relocated.

Why Does Net Eligible Income Matter?

Your total moving expense deduction cannot exceed your net eligible income for the year. This rule prevents individuals from using moving deductions to offset income unrelated to their relocation.

For example:

• If you moved for a new job and earned $10,000 from it in the same tax year, your maximum moving deduction is $10,000—even if your move cost $12,000.

• If you earned $25,000 in freelance income after moving, but the business was started in the new location, you could deduct up to $25,000 in eligible expenses.

Any unused portion of your deduction may be carried forward to the next year—provided you still earn income from the same source.

What’s Included in Net Eligible Income?

To clarify what you can count, here’s a breakdown:

Included:

• Gross salary or wages from new job (less CPP, EI, and pension contributions)

• Net income from self-employment at the new location

• Taxable scholarships, fellowships, bursaries, and research grants (students only)

Not included:

• Old job income earned before the move

• Interest, dividends, capital gains

• Employment insurance, CERB, or other non-work income

• Passive rental income (unless part of your new business)

How to Report Net Eligible Income

When filing your taxes:

1. Complete Form T1-M (Moving Expenses Deduction)

2. Enter your net eligible income in the designated field on the form

3. This number sets the maximum amount of moving expenses you can claim

4. If your expenses are greater than your net eligible income, carry the remainder forward to claim in future years