Business owner’s relocation costs

Expenses incurred for the benefit of a business are essentially chargeable to that business’ profit. There are scenarios in which it is plausible that the costs associated with the business owner moving house have been incurred with the business’ best interests in mind. According to the Income Tax Act Implementing Regulations 2001, the business owner’s relocation within a two-year term of the date as at which the business itself relocated is deemed to have occurred in a business context (subject to particular conditions governing the distance between the old and new locations). 

The Supreme Court recently decided – by way of departure from a 1970 ruling – that a start-up business owner’s relocation at the fledgling stage of the business in question may likewise be deemed to have occurred in a business context, rendering the associated costs chargeable to the business where the relocation has been essential in order for the owner properly to run the business or where it was primarily inspired by the ability to control future business expenses. The case in question dealt with a certified ship’s pilot whose job required him to have his abode within his operating territory, and who on joining a professional partnership of ship’s pilots had sold his old home, moved to a dwelling within his new territory and charged the costs of his relocation to his operating profit. The Supreme Court ended up finding for him.