For many tradespeople, employment opportunities often require traveling far from home. From electricians and plumbers to welders and carpenters, these skilled workers frequently accept temporary contracts in remote or rural areas. Until recently, the cost of this job-related travel was not deductible from their taxes. However, with the introduction of the Labour Mobility Deduction for Tradespeople, eligible workers in Canada can now reduce their taxable income by claiming certain travel and accommodation expenses. This tax measure helps to ease the financial burden of relocation and supports labour mobility in the skilled trades sector.
What Is the Labour Mobility Deduction?
The Labour Mobility Deduction (LMD) is a federal tax deduction introduced by the Canadian government, effective for the 2022 tax year onward. It allows eligible tradespeople and apprentices to deduct eligible travel and temporary relocation expenses when they have to work at a temporary construction site that is at least 150 kilometers away from their primary residence.
This deduction is aimed at encouraging tradespeople to accept work where it’s needed most, without bearing the full financial burden of travel and lodging. It recognizes the role of mobility in the skilled trades and helps level the playing field for workers who often go where the jobs are.
Who Is Eligible?
To qualify for the Labour Mobility Deduction for Tradespeople, an individual must meet certain criteria. These requirements ensure that only those who truly incur eligible mobility-related expenses can claim the deduction.
Eligibility Criteria
- The individual must be an employee or apprentice in a construction trade occupation.
- The taxpayer must have a temporary work location that is at least 150 km away from their primary residence.
- The work must be of a temporary nature and related to construction activity.
- The expenses must not be reimbursed by the employer.
- The individual must maintain a primary residence where they normally reside when not working away from home.
Workers who are self-employed are not eligible for this deduction, though they may qualify for other types of business-related expense claims.
What Expenses Can Be Claimed?
The Labour Mobility Deduction covers several types of reasonable expenses related to work travel and temporary lodging. These expenses must be directly related to the job and incurred during the employment period at the temporary work site.
Claimable Expenses Include:
- Meals and lodging costs while away from the primary residence
- Transportation to and from the work site
- Vehicle expenses such as fuel, repairs, and maintenance (if using a personal car)
- Hotel or motel stays
- Short-term rental accommodations
All expenses must be supported by receipts and should be kept in case the Canada Revenue Agency (CRA) requests documentation during a review or audit.
Annual Deduction Limit
There is a cap on how much a worker can deduct each year under this program. The maximum allowable deduction is $4,000 per year per individual. This amount can be comprised of various eligible expenses as long as they meet the criteria laid out by the CRA.
This limit ensures that the deduction is targeted to those who are genuinely impacted by temporary relocation but also prevents misuse of the program for personal travel or extended stays unrelated to employment.
How to Claim the Deduction
Claiming the Labour Mobility Deduction is done through a taxpayer’s annual income tax return. There is a specific line on the T1 General Income Tax and Benefit Return where eligible expenses can be entered. To do so:
- Fill out Form T777, Statement of Employment Expenses, including a detailed breakdown of eligible travel costs.
- Obtain a completed and signed Form T2200, Declaration of Conditions of Employment, from the employer confirming that the expenses were not reimbursed and were necessary for the job.
- Submit the forms with the annual tax return.
While these forms are not submitted with every return, they must be retained and available upon request by the CRA.
Benefits of the Labour Mobility Deduction
For tradespeople, the financial relief provided by this deduction can be substantial, especially for those who regularly travel long distances for work. Here are some of the key advantages:
- Reduces taxable income, resulting in lower taxes owed
- Provides financial recognition of the costs associated with temporary work relocation
- Encourages skilled tradespeople to fill jobs in areas experiencing labour shortages
- Improves workforce flexibility and responsiveness across provinces and regions
By easing the financial barriers to mobility, the deduction supports both workers and employers in the construction industry.
Real-Life Example
Consider Jake, a certified welder based in Halifax, Nova Scotia. He takes a 4-month contract at a job site in northern Quebec, more than 1,200 kilometers away. Jake rents a small apartment, drives to the work site daily, and buys groceries and fuel regularly. His employer does not cover any of these expenses.
Thanks to the Labour Mobility Deduction, Jake can claim expenses such as his rental lodging, meals, gas, and vehicle maintenance. At tax time, he fills out Form T777 and provides a signed T2200 from his employer. He claims $3,700 in qualifying expenses, which directly reduces his taxable income and results in a larger refund.
Tips for Tradespeople Planning to Claim
If you’re a tradesperson expecting to claim the Labour Mobility Deduction, here are a few tips to make the process easier and maximize your deduction:
- Keep all receipts for travel, meals, and accommodation.
- Track dates and locations of each job site where you temporarily worked.
- Use a mileage log if you drive your own vehicle.
- Talk to your employer early to ensure they’ll complete Form T2200.
- Consult a tax professional if your situation is complex or if you worked in multiple locations.
Proper documentation and planning are crucial to ensure you receive the full benefit of the deduction.
The Labour Mobility Deduction for Tradespeople is a welcome tax relief measure for thousands of skilled workers across Canada. By allowing eligible employees in construction-related trades to claim travel and accommodation expenses when working far from home, this deduction helps make temporary relocation more affordable and attractive. Whether working on remote job sites or across provincial borders, tradespeople can now offset some of the personal costs associated with their work. With proper documentation and attention to eligibility, this tax benefit can make a significant difference in a tradesperson’s annual return and overall financial well-being.