Northern residents deduction

You may qualify for the northern residents deduction if you lived in a prescribed area in northern Canada (northern or intermediate zone) on a permanent basis for a continuous period of at least six consecutive months commencing or ending in the taxation year for which a return is being filed. The deduction is claimed by filing Form T2222 with your return. You can review the CRA publication T4039, “Northern Residents Deduction— Places in Prescribed Zones,” to determine if you live in a prescribed northern or intermediate zone.

There are two deductions you may be able to claim:

1. A residency deduction for living in a prescribed zone
2. A travel deduction for taxable travel benefits you receive from employment in a prescribed zone

Residency deduction

If you live in a prescribed northern zone, you can claim $11 ($8.25 in 2015) for each day in the taxation year that you lived there and an additional residency amount of $11 ($8.25 in 2015) per day if you’re the only person in your household claiming the residency deduction. If you live in an intermediate northern zone, the residency deduction is half the above amounts.

The residency deduction is reduced by the non-taxable benefit for board and lodging at a special work site (box 31 of your T4 slip, or from the footnotes area of your T4A slip) and is limited to 20% of your net income.

Travel deduction

Subject to certain limits, you can also claim a travel deduction to the extent the value of travel benefits is included in your income from employment. This amount is reported in box 32 or 33 of your T4 slip, or box 28 of your T4A slip.

This deduction applies with respect to all trips made by you or a member of your household for the purpose of obtaining necessary medical services not available locally. It also applies to a maximum of two trips per person made by you or a member of your household (e.g., for vacations).

The maximum travel deduction you can claim cannot exceed the taxable travel benefits you received from your employer. The deduction for an employee in the intermediate zone is 50% of the amount that would be calculated for an employee in the northern zone.