Be aware of your tax deductions, CRA advises northerners
Northern residency, travel deductions important to claim, says agency spokesperson
People who live in the North can qualify for deductions based on their residency as well as travel, according to a Canada Revenue Agency spokesperson. The deadline for file taxes for the year 2023 is April 30. (File photo)
Updated on Wednesday, March 6, 2024 at 4:30 p.m.
With income tax season underway, there are deductions that northern residents qualify for just by living in the North.
“It’s important to be prepared and have all of your tax information slips that have come from your employer or for any businesses where you received any kind of income,” said Navneet Kaur, spokesperson for Canada Revenue Agency.
The deadline to file tax returns for 2023 is April 30.
Kaur said there are two important deductions people can claim if they live in Nunavut or Nunavik: a residency deduction and a travel deduction, both contained on Line 25500 of Form T2222.
Canada Revenue Agency spokesperson Navneet Kaur says residency and travel deductions are key for people living in the North when filing their taxes. (Photo courtesy of Canada Revenue Agency)
The residency deduction allows people living in either region to claim the basic residency amount of $11 per day, Kaur said.
Then there is the travel deduction that can be claimed for medical or personal trips.
“That’s one thing that I really wanted to emphasize, because that’s where we’ve worked closely with community volunteers as well as residents, and in order to simplify things for [claiming] these deductions,” Kaur said.
CRA has introduced a new way to calculate the lowest cost for air travel and claim the travel deduction, she said.
“[You’re] able to look up the information for the lowest return airfare cost and then consolidate all your travel expenses and claim that amount on your tax return,” Kaur said.
Kaur reminded people to use the deductions checklist on the T2222 form to claim deductions.
“That [checklist] tells you, if you’re claiming the basic residency amount, what are the documents and what is the eligibility criteria for that that you need to make sure is updated,” she said.
Make sure your name, address and eligible family members are all included there, as well as any taxable travel benefits you’ve received as income. Retain your receipts for travel expenses as well, she added.
Kaur notes there are two notable changes on this year’s tax forms that, while not specific to northern residents, will affect people who work from home or have a disability.
Nunavummiut and Nunavimmiut who work from home should be aware that CRA is returning to the detailed method for claiming home office expenses.
From 2020 to 2022, during the COVID-19 pandemic, residents could claim home office expenses through a flat rate method.
Now, people eligible to claim those expenses will be required to submit a form detailing all expenses that is signed by their employer.
CRA has also made disability tax credit application digital for this year, meaning people who qualify for it can submit their forms online.
An additional change is the deduction for tools for tradespersons, Kaur said. The amount that can be claimed has doubled to $1,000 from $500.
Volunteer firefighters and search-and-rescue volunteers can also claim $3,000 for one, but not both, of those positions if they served as a volunteer for the year or have completed at least 200 hours of eligible volunteer services in the year.
Kaur encourages residents of the North to file their taxes online to avoid potential delays at the post office, and to sign up for direct deposit to avoid waiting for cheques to arrive in the mail.
Last year, more than 97 per cent of Nunavummiut filed their taxes online.
There are also dedicated support lines northern residents can call for assistance and virtual and in-person tax clinics in Quebec and Nunavut residents can sign up for at no cost to learn how they should be filing their taxes.
Correction: This article has been update from its originally published version to remove incorrect information about the disability tax credit.
We have problems EVERY DAMN YEAR no matter what we do, no matter how or with whom we file.
It’s not worth it. We could have made just as much in Northern Alberta without the hassle of filing unusual returns or being held hostage by a monopolized airline.
There’s planes leaving every day.
Thanks, Bill. We’ll be on one as soon as we’ve extracted all the value we intend to extract.
Every year it’s a little harder to fill professional roles in Nunavut. I wonder if you will be so cavalier when all the competent people are gone.
Be aware of your tax deductions, northerners advise CRA, tired of being audited almost every damn year.
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Why do we have to prove we live in the north every year, when every year our T4s come from the north?
People complain about this annually, but tell anyone in the south you get 4-5 figures in refunds due to the northern residency and travel deductions and their jaws drop. My spouse and I average something like $15,000 between us.
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One thing I learned was that although it is limited to two non-medical trips, that each spouse can claim two. So when I and the spouse take four trips south, we claim 2 for spouse and 2 for me.
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Another tip is to search a return trip to Ottawa the week you’re travelling and save a copy of it. It is often higher than the average flight cost published by Canadian North.
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Again, if you’re diligent it isn’t that hard to keep the receipts organized for plane, rental car, taxi, ferry, cruise gas, mileage, hotels and airbnb expenses. Ya it is maybe 1 minute to snap a photo on your phone per receipt and save it to a folder, but I would say I earn about $3000/hr for the effort it takes to be prepared for these deductions and to file my return. I have been “audited” (aka being asked for basic information is not an audit guys) twice and I simply dump a spreadsheet with the expenses listed and 10-40 pages of receipts on them and never hear back again.
Rental car – the actual cost incurred of renting a vehicle is not a deductible expense, and should you should not advise that it is. Mileage driven (currently at 67.5 cents per kilometer) and gas are rental vehicle-related costs that can be deducted from taxable income.
You can deduct rental car cost if u use long format claim but u need all ur receipts and all that
Like I said, operating expenses (gas) are deductible regardless whether simplified or detailed method is used:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-25500-northern-residents-deductions/meal-vehicle-rates-used-calculate-travel-expenses-2023.html
Of course, if one knows the which expenses are deductible, one would certainly use the detailed method.
“Vehicle expenses
If you choose the detailed method to calculate vehicle expenses, you must keep all receipts and records for the vehicle expenses you incurred for moving expenses or for northern residents deductions during the tax year; or during the 12-month period you choose for medical expenses.
Vehicle expenses include: operating expenses such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs;
ownership expenses such as depreciation, provincial tax, and finance charges”
There is no mention of the rental vehicle cost.
There is also no mention that it is not deductible. It is an expense afterall. If depreciation on my car is deductible then the rental surely is. I use this and the detailed method to track gas. If there has been a tax court ruling on this then I’ll change my tactics but I have sent my info to CRA twice with rental car receipts from hertz and avis and no reassessment came from it.
Maaaan, you know you can’t claim more than the lowest return airfare, right? Even if you spent more on your airfare, or on your expenses that you listed?
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The wording is,
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“The maximum deduction you can claim for each eligible trip is the
lowest (emphasizing LOWEST) of the following three amounts:
•the taxable travel benefits you received from employment
or the portion of the $1,200 standard amount for the person travelling that you allocate to the trip
• the total travel expenses paid for the trip
• the cost of the lowest return airfare available at the time of the
trip between the airport closest to your residence and the
nearest designated city to that airport”
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It’s not totally clear from your comment, but it looks like you’re claiming the total expenses paid for your trip? If that’s what you’re claiming and it’s more than the lowest return airfare available, which is published information, then… well, maybe you should just set your refund aside this year. At least for 7 years,
I max out to the lowest return airfare x4 between two tax returns. The lowest return airfare is often higher the week of travel vs the Canadian North published averages. $32000 of allowance is available for deduction against minimum $3900 return x 4 trips. More if any are medically related,
I just wish they would believe we live here, seems every year have to reprove I still live in Nunavut… though always have and all my family also has and always will. Its like… oh even though all your employment has stayed the same maybe you secretly moved south, but trying to cheat the Feds so better get those land lease or rent and utilities documents ready.
Yes, its exhausting! However I often wonder, how often those owners of companies operating in Nunavut get audited? They are probably living in the south, all cushy with NU dollars. They don’t live in NU but their name is on the business registry, can they still claim residence?
That makes all we go through even more pointless. because someone can have all the right docs and still not Live here… so what every person has to send in a Selfie with an Justice of the Peace or RCMP out side with the town in the background.
one year they wanted proof that I lived in the north, I sent them a picture.
OMG!!!!😱
People in “none of it” pay taxes?!!!!
OMG!!!!
I read an article where “they” don’t even pay rent or their power bills.😱😝
Income support offices in kivalliq region make it hard to get SA. Rent and power is subsidized to the renter. Even if you get small earnings they’ll deny you SA. Some people get criminal records too which make it hard for Inuit to get a job. And for jobs, this is nunavut. Only job providers are northern, co-op, agnico eagle and small corner stores. You’re lucky if you get any income in the above mentioned. If not it’s drug deal or bootleg or carve or sell your catch of the day or eat your catch of the day.
“Badges?!!…We don’t need no steenkin’ Badges!”🤣
Good God!!! Watch out!!!! You may be required to pay taxes like the rest of us and hold jobs! (GASP!!!!! The inhumanity….)
The information is helpful. God
I’ve been on AISH, for about 25 years . I’ve NEVER been found to qualify for any type of disability tax.
I have a terminal illness that is very close to the end. Is Canada THAT cold hearted. How dare politicians call this one of the world’s greatest countries. Call me crazy…but I just don’t see it.
Would be good if CRA sent accountants to the communities to help people do there taxes for free. Northern still getting rich off crazy tax fees.
Why is the Nunavut solution to every challenge to have the government do everything for free? What a mentality we have here.
You are right about Northern, the amount they exploit off mostly the poorest people should be illegal.
There is a niche for someone in the community to learn to do taxes at a better rate and make some income off doing so. let that be the solution, not this infantilizing cry for the feds to come save us from ourselves.
Just wait until tax payers in communities try to obtain those convenient prepared forms to file their taxes!
They used to come through the post office but that has been cancelled.
” We are hoping people will file their taxes electronically”
Good luck!
this is a job for nti and qia, they manage billions of assets they can run a tax clinic in all 23 communities