If you lived in the northern regions of Canada for at least 6 consecutive months, you might be able to claim certain deductions on your federal tax return using form T2222: Northern residents deduction.
Note: If you live in a remote area located in the province of Québec, you can also claim the related provincial deductions on your Québec tax return, by completing form TP-350.1-V: Calculation of the deduction for residents of designated remote areas.
As a northern resident, there are two additional deductions you’re allowed to claim both of which are described below: the residency deduction and the deduction for travel benefits. Where you live will determines the deduction amounts you’re entitled to.
For example, you can claim the deduction amounts in full if you live in a prescribed northern zone (Zone A). If you live in a prescribed intermediate zone (Zone B), you’re only eligible for half of the deduction amounts. To find out if you live in one of those zones, visit the Canada Revenue Agency (CRA) website.
If you recently moved and haven’t yet lived in a prescribed zone for 6 consecutive months, you can file your return without claiming your deductions; when you do qualify, you can ask the CRA to adjust your return. If you lived in a prescribed zone for work, but your permanent home is elsewhere, you still might qualify for a deduction. Visit the CRA website for more information on temporarily living at special work sites.
The residency deduction is for northern residents who live in a prescribed zone on a permanent basis in a house, apartment, or so on. If you lived at a camp, bunkhouse, hotel room, dormitory, or boarding house, you won’t be able to claim this deduction. It’s limited to 20% of your net income, and has two parts: a basic residency amount and an additional residency amount.
The basic residency amount is based on the number of days during 2016 that you lived in a prescribed zone. Generally speaking, absences won’t affect your period of residency (for example, if you go on vacation) but it depends on your reason for leaving and how long you were gone.
If you didn’t live in a prescribed zone on a permanent basis, you might still qualify for the basic residency amount if you lived at a special work site that’s located in a prescribed zone for at least six consecutive months. In this case, your residency amount is reduced by the non-taxable benefits you received for board and lodging for working at a special site. You can find these amounts in box 31 of your T4 slip or box 124 of your T4A slip.
The additional residency amount is based on how many days you used to calculate the basic amount if:
- You lived in and maintained a home located in a prescribed zone
- You’re the only person in the household claiming the basic residency amount
Everyone in your household can claim the basic residency amount if they qualify for it. However, keep in mind that if more than one person claims the basic amount, no one can claim the additional amount.
For more information on the residency deduction, visit the CRA website.
Travel benefits deduction
You can claim this deduction if you worked in a prescribed zone during 2016 and needed to travel for your job. To qualify, make sure you meet the following requirements:
- You qualify to claim the northern residents deductions
- You’re an employee who deals at arm’s length with your employer (in other words, you’re not related)
- You’ve included your taxable travel benefits in your income for the same year that you took your trip
The most you can deduct from each eligible trip is the lowest amount out of:
- The taxable travel benefits you received from your employer for the trip
- The total travel expenses you paid for the trip
- The cost of the least expensive return flight (lowest return airfare*) available when you took the trip between the airport closest to where you live and where you were going (nearest designated city)
If you’re claiming these benefits for another member of your household, they must have been living with you at the time they travelled.
- Taxable travel benefits include
- travel assistance provided by your employer such as airline tickets and
- a travel allowance or a lump-sum payment you received from your employer for travel expenses you paid.
Generally, any travel expenses (except those for employment purposes) that your employer paid to you are considered taxable benefits.
- Travel expenses are air, train, or bus fares, vehicle expenses, meals, hotel or motel accommodations, camping fees, and other incidentals such as taxis and tolls.
- Lowest return airfare is the lowest airfare that's available for regularly scheduled commercial flights, excluding promotions or discounts that aren't normally available, on the date that the travel began. It also includes any GST/PST/HST and airport taxes. Additional charges, such as flight cancellation insurance, meals, and baggage surcharges aren't considered part of the lowest return airfare.
For more information on the travel benefits deduction, visit the CRA website.
Calculating your meal and vehicle expenses
When it comes to calculating the meal and vehicle expenses related to your travels, you can decide to use either the detailed or simplified method of reporting, as long as your total travel expenses equals the combined total of the travel assistance provided by your employer and the expenses that you incurred and paid for yourself.
Detailed method: Using the detailed method of reporting expenses allows you to claim the actual amount that you spent. Of course, this means that you’ll need to keep each receipt to validate your expenses.
Simplified method: Using the simplified method, a flat rate is used to calculate your daily meal and vehicle expenses. Even though you aren’t required to keep all of your receipts when using the simplified method, you should still hang onto some documentation that can support your claim(s).
- Meals: Claim a flat rate of $17/per meal (up to $51/day including tax, per person). These can be claimed in either Canadian or U.S. funds.
- Vehicle expenses: Record the kilometres driven during the tax year for the trip. To figure out the amount you’re allowed to claim on your return, simply multiply the cents/km rate for the province or territory where your travels began. Check out the CRA website for the rate that applies to you.
I’m travelling for medical reasons. Can I claim my attendant’s travel expenses?
Yes. If you’re travelling for a valid medical reason and you require attendant care while travelling, you can claim your attendant’s travel expenses along with your own. For more information, refer to the CRA website.
Where do I claim this?
Follow these steps in H&R Block’s tax software to file your 2016 taxes:
- On the PREPARE tab, click the OTHER You’ll find yourself here:
- Under the SPECIAL SITUATIONS heading, select the checkbox labelled Northern residents deductions (T2222), then click Continue.
- When you arrive at the page for the Northern residents deductions, enter your information into the tax software.