Liberals to widen reach of northern residents’ travel deduction

Federal government proposes tax benefit of up to $1,200 for “all northerners who travel”

The Liberal government wants to make the travel portion of the northern residents’ tax deduction available to all northerners who travel. (File photo)

By Jim Bell

Canada’s new northern affairs minister, Dan Vandal, is instructed to work with Finance Minister Bill Morneau to increase the travel portion of the northern residents’ tax deduction by up to $1,200, and ensure that it benefits “all northerners who travel,” Vandal’s mandate letter from Prime Minister Justin Trudeau states.

Trudeau issued mandate letters to Vandal and other ministers today, on Friday, Dec. 13, containing the marching orders that Liberal cabinet members are expected to follow.

“As minister of northern affairs, you will lead the government’s work to create more economic opportunity and a higher quality of life in the north of Canada, while also acting in support of our sovereignty and national interest,” Trudeau’s mandate letter said.

“This includes strengthening the relationship with the territorial governments and advancing policy and programs that support Northerners.”

The instruction on the northern residents’ deduction sits at the top of a list that details Vandal’s mandated priorities.

Right now, the northern residents’ travel deduction is available only to northern tax filers who receive some kind of vacation travel benefit, which usually means the highest-paid workers.

Those employees can claim the value of the lowest return air fare to a designated southern city, plus other vacation travel expenses, and use those amounts to reduce their taxable income.

Northern tax filers who receive no vacation travel assistance or VTA, which includes self-employed people and those who work for many small businesses, cannot claim a travel deduction.

But the Trudeau government wants to make a travel deduction available to any northern tax filer.

If that’s carried out, many northerners could end up paying less income tax and receive larger tax refunds.

To that end, Trudeau has instructed Vandal to increase the northern residents’ travel deduction to “at least $1,200 in the northern zone and at least $600 in the intermediate zone so that it benefits all Northerners who travel.”

The “northern zone” covers all of Nunavut, the Northwest Territories and Yukon. The “intermediate zone” means certain less costly communities, mostly located in the northern regions of provinces.

This move follows on a campaign promise the Liberals made prior to the Oct. 21 election—it’s contained, for example, in a letter the party wrote to Canada’s premiers during the campaign.

Also, any improvement to the northern residents’ tax deduction must be done for the benefit of northerners, and not the airlines, Vandal’s letter said.

“You will work with the Minister of Innovation, Science and Industry [Navdeep Bains] who is the minister responsible for the Competition Bureau to ensure that these savings are for the benefit of citizens in the North rather than transportation providers,” the letter said.

The other part of the northern residents’ deduction, the “residency deduction,” is available to anyone who lives and works continuously in the North.

That benefit allows a single tax filer to deduct up to $8,030 from their taxable income.

Here are some of Vandal’s other mandate letter instructions:

• Work with the minister of Crown-Indigenous relations, Carolyn Bennett, to co-develop and implement an Inuit Nunangat policy, and fully implement Inuit land claims agreements.

• Work with Foreign Affairs Minister François-Philippe Champagne and other ministers as necessary to implement the Arctic and Northern Policy Framework.

• Work with the Government of Nunavut, Nunavut Tunngavik Inc., and Bennett, to follow through with the construction and ongoing operation of a treatment facility in Nunavut.

• Continue work on a final devolution agreement for Nunavut.

• Work on establishing “a robust system of post-secondary education in the North.”

• Work with the minister responsible for the Canadian Northern Economic Development Agency, Mélanie Joly, on territorial planning for hydroelectricity projects.

• Work with Joly to have CanNor support a wider range of projects.

• Work with the minister of environment and climate change, Jonathan Wilkinson, on monitoring spending at the Eureka weather station on Ellesmere Island.

• Keep an eye on the Polar Continental Shelf Program.

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(10) Comments:

  1. Posted by Observer on

    Here’s an idea: “Work with Revenue Canada to STOP DEMANDING I PROVE I LIVE IN NUNAVUT EVERY FREAKING YEAR!”

    • Posted by Northern Inuit on

      Not only that but to audit countless Northern Residents.

      Again this year I was reassessed and my tax adjuster advised me that because CRA asked for proof of Northern Residency again I have to pay an additional $105 for their work.

  2. Posted by Silas on

    Many Inuit now live in different communities in the north. The thinking in this is still southern based for travel. If this is to truly benefit people of the north then the thinking has to be from a northern perspective.
    They continue to think north south-south north; I believe they must begin to think of those who move within the north, from territory to territory, from a community in the same territory to another community. Those who move from Kitikmeot to Iqaluit have to travel through Yellowknife to Iqaluit. People who have relatives in NWT but live in Nunavut or the Yukon. As it stands now those who benefit the most are those who have relatives in the south.
    People who wish to see their traditional homelands (as in on the land) should be able to charter planes and move gear to and from their traditional lands and make those tax deductible. For example, people in Baker Lake have relatives in the Kitikmeot because they were separated by relocation and their traditional homelands are somewhere in the middle, as in Garry Lake, Back River, Chantry Inlet etc. That, I believe would truly benefit people of the north and specifically Inuit.

    • Posted by Annie on

      Chartering planes Silas!? Geez! most Inuit can barely afford taxi fare to/from the airport. You clearly are in a higher tax bracket than most of us poor struggling Inuit:-/

      • Posted by Silas on

        Government employees, regardless of where they come from, receive Vacation Travel Assistance. Those from the south travel to their point of departure, i.e. Ottawa in the Baffin region, Winnipeg in the Kivalliq, Edmonton in the
        Kitikmeot, then they keep those receipts including hotels, meals, car rentals and claim that back in their tax return. Their tax return will be added another $3,000-$8,000, depending on the size of their family. Their tax return can be well over $10,000.
        Inuit, if they go out on the land for vacation, receive back what they paid for food and gas. They MIGHT get up to $1,000 more for their vacation. They must prove this with receipts just like those who travel south.
        My family and I travelled to Yellowknife this past summer to visit family for my vacation so for me this will be a test to see if this government will truly live up to the letter in this article.

        • Posted by Dave on

          From the article:To that end, Trudeau has instructed Vandal to increase the northern residents’ travel deduction to “at least $1,200 in the northern zone
          The max is $1200

          Keep in mind, this is a tax deduction, not a reimbursement from the government.

          • Posted by Silas on

            My point is that it appears that the tax deduction will be made fairer for those who travel south regardless of employer. Those who had not been allowed this deduction will now be able to apply the deduction. However, the thinking will likely continue to be south-north only.
            If you are from the south it’s great but what about those who travel in the north and don’t travel south for their vacation? Will I now be able to apply for this deduction, say if I travel to Gjoa Haven from Baker Lake return?
            If it is, why is it now going to be maxed at $1,200 when it wasn’t before. Those who travel only in the north will still be getting the short end of the stick when it comes to this deduction because of the high cost of travel in the north.
            It would be fairer if it was based on a percentage of travel costs rather than maxing at $1,200.

            • Posted by Dave on

              The article did say they raised it to $1200 Silas, I suspect you’re thinking of another northern deduction, not travel.

              I’m no accountant, but as I understand it the Northern travel benefit is for travel for work or medical trips only. It is not designed to be used for a family vacation. That said, I do think many claim travel for medical trips, that are not for medical purposes as the government doesn’t ask for proof, just receipts. But that doesn’t mean it’s right and maybe one reason we are audited so often.

  3. Posted by Beneficiary on

    No thanks for taxing my flight. The cost of a ticket will soar way up. Leave our Airline alone.

  4. Posted by Same Old on

    The travel portion of the northern residents’ tax deduction has always been a benefit for the airlines.

    You give the airlines a lot of money and Ottawa will let you keep a little of your own money.

    The only “fair” way for Ottawa to provide a travel benefit for all Nunavummiut is for Ottawa to purchase a round trip ticket to Ottawa for every Nunavummiut each year.

    Those of us who live on social assistance are not allowed to save enough money to pay for a ticket. No ticket, no flight. No flight, no travel benefit.

    This is the same old sh*t. Benefits for the upper middle class.

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