Revenue Canada tracks northern residents

If you live in Iqaluit, shown here, or in some other northern community, you may be asked to prove your residency to benefit from Revenue Canada’s Northern Residents Deduction. (PHOTO BY JANE GEORGE)

Filing taxes in Nunavut can be a little taxing, says Iqaluit resident Terry Audla.

Audla wasn’t impressed when he opened a piece of mail last week saying he owed thousand of dollars to the Canada Revenue Agency.

The agency said it never received proof of Audla’s northern residency status.

That’s a deduction on line T2222 of your tax form that can mean up to $6,000 in deductions for residents of Nunavut and Nunavik — regions that the revenue agency calls Zone A.

Residents of those regions can also claim travel benefits they received from work-related travel or medical travel.

The Canada Revenue Agency reviews the Northern Residents Deduction claim annually and does spot checks to follow up on claims.

But Audla likely missed that original spot check in the mail, only noticing when the agency sent a second notice saying he owed for the initial deductions.

To settle the issue, Audla must provide proof that his Iqaluit address is indeed his permanent dwelling, which he plans to do.

“It’s just an inconvenience,” he said. “They’re mailing to a northern address. You think they’d put two and two together.”

Audla is also concerned about the number of times he hears about fellow Nunavummiut who are reviewed for their Northern Residency Deductions.

“It seems that other northerners have been targeted,” he said. “It appears that every second person has been through it. Imagine what non-English-speaking Inuit have to go through?”

Audla knows the difficulties some Inuit face come tax time – he once worked for Makivik Corp. as an income tax coordinator in Nunavik communities, helping residents fill out their forms.

Many Inuit elders have never filled out a return, and don’t plan to, missing out on the returns, Audla said.

Inuit across the country could benefit from Inuktitut-language support like Makivik’s program during tax season, to make sure they understand and participate in the process, he said.

Iqaluit accountant Andrew Waywell says he hasn’t experienced it firsthand, but has heard from clients that the Northern Residents Deductions are heavily reviewed.

The revenue agency likely has a track record for gathering more money from northern claimants who fail to send their proof of residency, Waywell said.

That’s not to say northern residents are taking advantage of the deduction, but rather that some miss the notices sent out by the agency.

“It just seems they target that deduction,” Waywell said.

But the Canada Revenue Agency denies that.

“As with all other claims, the number of reviews for this claim is adjusted each year in consideration of the non-compliance rates observed in our annual review of this claim,” said agency spokeswoman Rebecca Merrett. “Claims are also selected on a random basis.”

The agency uses an automated validation process to look at all claims filed, Merrett said — a process which is not based on geographical location.

The agency does not have statistics to show the difference in adjustment rates.

Merrett said there is generally a high level of compliance across the country, although continuous monitoring is always required.

For more information on the North Residents Deduction, visit www.cra.gc.ca/northernresidents. You can download the actual claim form here.