It’s no secret life in the North is expensive, but there are a number of tax breaks for Northerners that can reduce the burden on households.
Anyone who has lived in the Northwest Territories, Yukon Territory or Nunavut for half a year consecutively is eligible for ‘Northern resident deductions’ — an $11 per day credit for every day you live in Canada’s far North as well as a travel deduction on airfare.
“These deductions provide relief to those who live in a prescribed zone and recognize that such individuals are often faced with a higher cost of living, environmental hardships, and limited access to services,” read the federal government’s website. “You can claim the residency deduction if you have lived, on a permanent basis, in one or more prescribed zones for a continuous period of at least six consecutive months.
“That period can begin or end in the tax year for which you are filing a tax return.”
Flights and other travel for medical travel or even vacations can be claimed, provided you still have the receipts to prove you made the flight. The lowest of three different options can be claimed, either the total of actual travel expenses, the lowest return airfare for the dates or the value of a taxable benefit provided for travel.
Using a chart provided on the government’s website, one can determine the lowest return airfare for any given travel day, which is the maximum amount that can be claimed for a trip — unless it exceeds $1,200, which is the absolute maximum dollar amount that can be claimed per person for travel expenses.
“To claim Northern residents travel deduction, you must use the applicable lowest return airfare (LRA),” read the federal government’s website. “The LRA is the cost of the cheapest round-trip airfare available when your travel begins, between the airport closest to your residence and the nearest designated city.
“If you want to use an airfare amount that is different than one given in one of the LRA tables, keep receipts and documents to support the amount, in case the CRA wants proof.”
Other travel expenses that can be claimed include hotels, vehicle expenses and even food.
Northerners should also remember that any expenses incurred by employment travel are not eligible for the benefit if an employee is related to their employer.
“You can claim a residency deduction even if you are not claiming a travel deduction,” read the federal government’s website. “Each deduction is calculated separately.”
Anyone who maintains a dwelling, which is to say anyone who has their own home, can also claim an additional $11 per day they have maintained that dwelling.
However, only one person per household can claim this extra benefit.
“A dwelling is a self-contained domestic establishment,” read the website. “Generally, this is a complete and separate living unit with a kitchen, bathroom, sleeping facilities and its own private access.
“Use Form T2222 to calculate your Northern residents’ deductions. It also contains instructions to help you complete the form.”