Overview of the Labour Mobility Deduction (LMD)
The Labour Mobility Deduction enables eligible tradespeople or apprentices in the construction industry who relocate temporarily to deduct eligible relocation expenses up to a certain limit when moving for work. It includes costs like temporary lodging and travel. (budget.canada.ca)
Key 2026 Changes from Spring Economic Update
- Limit increase: Deduction ceiling goes from $4,000 to $10,000 per year starting in 2026, then indexed thereafter. (budget.canada.ca)
- Distance rule update: Temporary lodging must be at least 120 kilometres closer to work location than your ordinary residence. The previous rule was 150 km. (budget.canada.ca)
- Applies to 2026 and later tax years. (budget.canada.ca)
Who Qualifies?
To claim the LMD, you must be:
- A tradesperson or apprentice in construction or related trades;
- Facing a temporary work location, meaning not a permanent relocation;
- Incurring temporary lodging closer to the work site than your home;
- Relocating within Canada for employment duties.
Examples in Practice
Example 1: Jane, a carpenter whose permanent home is in City A, gets a six-month contract in City B. City B is 200 km from City A. She rents lodging in City B. She can deduct lodging and related travel, up to $10,000, if lodging is at least 120 km closer than her regular residence.
Example 2: Mike, an apprentice working on a one-month job in a remote town, travels daily from afar. If his temporary lodging qualifies and he meets the distance test, he may deduct eligible amounts, but must check lodging criteria closely.
Claiming & Compliance Tips
- Track all expenses: receipts for lodging, meals, transport are essential.
- Document the temporary nature: contract duration, project timeline, return home plan.
- Measure distances properly: use official maps/tools; record ordinary residence and work location distances.
- File in correct tax years: changes take effect for taxation years beginning in 2026.
Implications & Opportunities
- More generous limit gives greater relief for tradespeople often paying for lodging near distant jobs.
- Reduced distance threshold makes more people eligible.
- Need for accurate record-keeping increases: stricter eligibility standards mean more oversight.
What to Do Now
- Review whether you’ve made or plan a temporary relocation for work in 2026+.
- Estimate potential deductions under new rules.
- Consult an accountant if your situation is complex (e.g., overlapping contracts, long-term stays).
- Keep an eye out for CRA guides or bulletins on the operational application of the LMD changes.