If you lived in a northern or remote area for six months or more during the tax year, you may qualify for the northern resident’s deductions. These deductions recognize the unique challenges faced by northern residents, such as higher living costs and limited access to services.
The northern resident’s deductions consist of two parts: 1. Residency Deduction 2. Travel Deduction
These deductions can provide financial relief for both your daily living expenses and eligible travel. If you qualify, these deductions will reduce your taxable income on Line 25500 of your tax return.
Line 25500 – Travel Deduction
You can claim a travel deduction for trips you took for medical or other reasons (such as vacation) that began from a prescribed zone. The trip can be made by you or an eligible family member using various modes of transportation.
You can claim up to two personal trips that you took and up to two personal trips taken by each eligible family member. It doesn't matter who claims the trips, but only two personal trips per individual can be claimed in a tax year. There is no limit on the number of claims for medical trips.
Eligible Family Members
An eligible family member is someone who lived with you at the time of the trip and who is one of the following:
- Your spouse or common-law partner
- Your child or your spouse's/common-law partner's child under the age of 18
- An individual who is wholly dependent on you (or your spouse/common-law partner) for support and is one of the following:
- Your or your spouse's/common-law partner's parent or grandparent
- Another individual related to you who is wholly dependent due to mental or physical infirmity
How to Claim the Travel Deduction
1. Complete Chart A in Step 3 of Form T2222, Northern Residents Deductions, to identify yourself and any eligible family members who lived with you during the period(s) indicated in Step 1. Indicate how you allocated each individual’s $1,200 standard amount (if applicable).
2. Complete Chart B to calculate your travel deduction.
3. Provide Receipts and Records: You must provide receipts or records for the total travel expenses. Additionally, you need to provide the Lowest Return Airfare (LRA) available at the time of the trip between the airport closest to your residence and the nearest designated city. You can find the LRA information at canada.ca/lowest-return-airfare.
Special Circumstances
- Reimbursed Trips: If you take a trip that begins and ends in one year and are reimbursed in the following year, you cannot claim the travel deduction for that trip. However, you can claim the deduction if the trip begins in one year and ends in the next (e.g., you leave in December and return in January).
- Non-Refundable Tickets: If you receive non-refundable tickets or travel vouchers, the taxable travel benefit should be included in your T4 or T4A slip for the year the trip begins.
- Taxable Travel Benefit: If you or an eligible family member uses a taxable travel benefit received from employment to calculate a travel deduction for a trip, then no one (including the individual) can use any part of their $1,200 standard amount for a travel deduction claim for that trip.
- Claiming the Deduction: You can claim the travel deduction even if you are not claiming the residency deduction. For example, if your spouse or common-law partner claims both the basic and additional residency amounts, you can still claim the travel deduction.
When You Cannot Claim the Travel Deduction
You cannot claim the travel deduction in the following situations:
- You or your eligible family member received (or were entitled to receive) non-taxable amounts as travel assistance, a travel allowance, or reimbursement for travel expenses.
- Someone else has already claimed the travel deduction for this trip on their tax return.
In short, be sure to meet all eligibility requirements, complete the necessary forms accurately, and keep proper records to support your claims.
Posted on 14 November 2024