Living in the North usually costs more, and getting anywhere costs more again. The northern residents deductions recognize that: one part for living in a prescribed zone, one part for the trips you took out of it.
Both are calculated on Form T2222, Northern Residents Deductions, and the total goes on line 25500 of your return.
Who qualifies
You qualify if you lived, on a permanent basis, for a continuous period of at least six consecutive months in one or more of the following:
- a prescribed northern zone (Zone A)
- a prescribed intermediate zone (Zone B)
The Canada Revenue Agency (CRA) lists the places in each zone, province by province, on its page for this line. All places in Yukon, Nunavut, and the Northwest Territories are in a prescribed northern zone, as is all of Labrador.
Which zone you lived in changes the size of the claim. Zone A residents claim the full amount of the deductions. Zone B residents claim one-half.
A temporary absence does not usually affect your period of residency if you lived in the zone on a permanent basis. Moving from one place in a prescribed zone directly to another does not affect it either. If you have not yet reached six consecutive months when you file, you do not yet qualify — file your return without the claim, and ask the CRA to adjust it once you do.
The two deductions
The residency deduction, calculated in Step 2 of Form T2222, has two parts. A basic residency amount for each day you lived in the zone, and an additional residency amount for the days you maintained and lived in a dwelling there — but only if you are the only person claiming the basic amount for that dwelling and period.
A dwelling is a self-contained domestic establishment: a complete, separate living unit with a kitchen, bathroom, sleeping facilities, and its own private access. A bunkhouse, dormitory, hotel room, or room in a boarding house is not a dwelling. You are still considered to have maintained and lived in one even if your employer let you live there rent-free and paid the costs.
The travel deduction, calculated in Step 3, covers trips that started from a prescribed zone and were taken by you or an eligible family member. The trip can be for medical reasons or other reasons, such as a vacation. You can claim a travel deduction even if you are not claiming a residency deduction.
You can claim up to two trips taken for non-medical reasons by each person, and any number of medical trips.
What counts as a travel expense
For each trip you are claiming, the travel expenses are:
- air, train, and bus fare
- vehicle expenses
- meals
- hotel or motel accommodations
- camping fees
- other incidental expenses, such as taxis and road or ferry tolls
Your total travel expenses include any travel assistance or travel expenses paid by your employer.
For meals and vehicle expenses, you may choose the detailed method or the simplified method. The detailed method claims what you actually spent, so it needs receipts. The simplified method uses flat rates, so it does not need detailed receipts — but keep a record of the trips, and of the kilometres driven for vehicle expenses, because the CRA may still ask for some documentation to support the claim. Accommodation receipts are always required either way.
The lowest return airfare
Every claimed trip needs a lowest return airfare, even if you drove, and even if you never left the territory. It is the cost quoted for a flight from the airport closest to your residence to the nearest designated city for that airport, on the date the travel began. It excludes promotions or discounts that are not ordinarily available, and it does not include extras such as flight cancellation insurance, meals, or baggage surcharges.
You have two ways to support that figure:
- A quote or an actual fare. Keep the airfare receipts and supporting documents, in case the CRA asks for proof of the cost.
- The CRA's lowest return airfare table. Use the table amount for your travel date and closest airport. No quote, receipt, or supporting document is needed. Charter flight costs are not part of the table amounts.
What does not qualify
Travel that was covered tax-free. You cannot claim a travel deduction if you or your eligible family member received, or was entitled to receive, non-taxable amounts as travel assistance, as a travel allowance, or as a reimbursement for travel expenses.
A trip someone else already claimed. If another person has claimed the travel deduction for the trip on their return, you cannot claim it too.
Medical trip expenses claimed twice. If you claim the expenses for a medical trip on Form T2222, no one — including you — can claim them as medical expenses on a return.
Board and lodging you received tax-free. Non-taxable benefits for board and lodging at a special work site, shown on your T4 slip or your T4A slip, reduce your residency amounts rather than adding to them.
What to keep
Have all your supporting documents on hand, including the lowest return airfare available at the time of the trip, when you are completing Form T2222. For a travel claim, that generally means:
- receipts for fares, accommodations, meals, and incidentals, according to the method you chose
- a record of the trips, and the kilometres driven for the qualifying trips
- a travel itinerary or other proof of travel, which may be required to support the travel part of a claim
- your airfare quote or receipts, unless you used the CRA's table amount
- your T4 or T4A slip, which shows any taxable travel benefits your employer gave you
If you file on paper, attach the completed Form T2222 to your return but send no other documents. If you file electronically, keep the form with your records. Either way, keep all the receipts and documents that support your claim for at least six years, in case your return is chosen for review.
Official CRA sources
- Line 25500 – Northern residents deductions
- Meal and vehicle rates used to calculate travel expenses
- Lowest return airfare table
Source: Canada Revenue Agency (canada.ca). Not tax advice.