Labour Mobility Deduction (LMD)

Labour Mobility Deduction or “LMD” is a new deduction available to tradesperson or apprentices which will allow them to claim eligible temporary relocation expenses paid during 2022 and subsequent years. Eligible tradesperson can claim a deduction for transportation, meals and temporary lodging expenses incurred while traveling to distant construction project locations within Canada.

An eligible tradesperson or apprentice is an individual who performs his/her duties in construction which involves such activities as erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal of all or any part of a building, structure, surface or sub-surface construction or any similar property (source: canada.ca)

A temporary work location is any location in Canada where the tradesperson performs his/her duty under a temporary employment contract and the location is outside the locality where he/she is ordinarily employed.

An eligible temporary relocation for an individual who ordinarily resided at a residence in Canada, must have been required by their employer to be away from his/her residence for at least 36 hours. Furthermore, the temporary lodging location must be at least 150 KM closer than the taxpayers residence to the temporary work location.

Eligible relocation expenses incurred in the tax year or prior to February 1 of the following year include:

Round-trip transportation expenses from the individual's residence to the temporary lodging location

Meals consumed during the round-trip relocation provided there are no reimbursements from the employer

Temporary lodging expenses provided that the individual's residence is not rented to any other person during the round-trip relocation

Eligible expenses must be claimed in the tax year they were incurred but can be carried forward if there was insufficient income earned to offset the eligible expenses. The deduction is limited to a maximum of 50% of the total income for the year, up to a maximum of $4,000. Labour Mobility Deduction will be claimed on the individual's T1 income tax and benefit return specifically form T777 (Line 11). It should be noted that the eligible expenses must not be claimed by the individual as any other form of moving expense except as LMD.

To support your claim, the individual is required to maintain records which may include any of the following:

A daily record of expenses including receipts and canceled cheques

Ticket stubs

Invoices

Tenancy agreement

Credit card statements

Record of motor vehicle expenses (simplified or detailed methods)

There is no need to remit the records to the CRA, but the individual must maintain them for a period of minimum six (6) years in case CRA asks for them.

For further information please contact Softron at 1-877-SOFTRON or visit www.softrontax.com