RC4650 Northern Residents Deductions for 2018

What are the northern residents deductions?

The northern residents deductions consists of a residency deduction (for living costs) and a deduction for travel benefits.

These deductions provide relief to those who live in a prescribed zone and recognize that such individuals are often faced with a higher cost of living, environmental hardships, and limited access to services.

For more information about the northern residents deductions, go to line 255, Northern residents deductions or call 1-800-959-8281.

What form should you use?

Use Form T2222, Northern Residents Deductions for 2018, to calculate your northern residents deductions. It also contains instructions to help you complete the form.

Can you claim the residency deduction?

You, and all the members in your household, can claim the residency deduction if you have lived in one or more prescribed zones for a continuous period of at least 6 consecutive months. That period can begin or end in the tax year for which a tax return is being filed.

If you lived in a northern zone, you can claim the basic amount of $11 for each day that you lived in this zone.

If you lived in an intermediate zone, you can claim the basic amount of $5.50 for each day that you lived in this zone.

You can claim an additional residency amount if you maintained and lived in a dwelling in the northern or intermediate zone during that time and you are the only person in your household claiming the basic residency amount.

A dwelling is a self-contained domestic establishment. Generally, this is a complete and separate living unit with a kitchen, bathroom, sleeping facilities, and its own private access. To help you determine if you lived in a dwelling in the prescribed zone, refer to Step 2 of the instruction sheet of Form T2222.

Can you claim the deduction for travel benefits?

If you received travel assistance (such as airline tickets or a trip on the company owned plane) from your employer or a travel allowance or a lump-sum payment from your employer and you actually incurred expenses to travel for personal reasons, you can claim a deduction for travel benefits for that trip. You can only claim this deduction for a trip that you or your household members (who lived with you at the time of the trip) actually took for vacation, family or medical reasons and that started from a prescribed zone. You cannot claim this deduction for travel required by your employer or related to your employment.

The maximum deduction for travel benefits you can claim for each eligible trip is the lowest of the following 3 amounts:

• the value of the taxable travel benefit received from your employer
• the actual amount that you spent on your trip (keep all your receipts and other supporting documents)
• 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 (the nearest designated cities are: Vancouver, BC, Calgary, AB, Edmonton, AB, Saskatoon, SK, Winnipeg, MB, North Bay, ON, Toronto, ON, Ottawa, ON, Montreal, QC, Quebec, QC, Moncton, NB, Halifax, NS, St. John, NL)

Travel expenses include air/train/bus fares, vehicle expenses, meals, hotel or motel accommodations, camping fees, and other incidental expenses such as taxis and road/ferry tolls.

Do you have all your receipts and other supporting documents?

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.

Keep all the receipts and documents to support your claim for at least 6 years in case your return is being reviewed.

The Canada Revenue Agency needs additional information from you?

The Canada Revenue Agency (CRA) may ask for more information from you before your tax return can be assessed. If you can’t provide the information on time, contact the CRA to request an extension.

Your tax return has been selected for review?

If your return is selected for review, you will be asked to provide your supporting documents to verify the amounts you claimed. If you can’t provide the information on time, contact the CRA at the number provided in the letter you received to request an extension.

You have received additional information after your claim has been reviewed?

If your claim has been adjusted after being reviewed by one of our programs and you have additional information or documents related to the claim, the CRA will accept all new submissions and review your claim again for a possible adjustment.

Send any additional information or documents to the address indicated in the CRA letter.

Frequently asked questions

Question 1

Can I claim the residency deduction even if I am not claiming the deduction for travel benefits?

Answer 1

Yes, you can claim a residency deduction even if you are not claiming a deduction for travel benefits. Each deduction is calculated separately in Step 2 (residency deduction) and Step 3 (deduction for travel benefits) of Form T2222, Northern Residents Deductions.

Question 2

Can I claim the residency deduction and travel benefit deduction if I lived in a prescribed zone from January 31, 2018 to April 15, 2018?

Answer 2

No. You must have lived in a prescribed zone for a period of time that was continuous and lasted at least 6 consecutive months beginning or ending in the tax year. This requirement applies to both the residency deduction and the travel deduction.

Question 3

I moved to Beaver Lake, Saskatchewan on November 30, 2018. Can I claim the residency deduction on my 2018 tax return?

Answer 3

The northern residents deductions are generally available when an individual lives in one or more prescribed zones for a continuous period of at least 6 consecutive months. This period can begin or end in the tax year for which a tax return is being filed.

At the end of the 2018 tax year you lived in a prescribed northern zone for one month. Therefore, at the time you file your 2018 tax return you do not yet qualify. File your 2018 tax return without claiming the residency deduction. When you qualify (May 31, 2018), you can ask us to adjust your 2018 tax return to allow a residency deduction of $352 [$11 X 32 days – November 30, 2018 to December 31, 2018] for the time you lived in the prescribed zone in 2018.

To adjust your 2018 tax return, follow the instructions in the Federal Income Tax and Benefit Guide under the heading How to change a return.

Question 4

Am I eligible to claim the northern resident deductions if I was absent from a prescribed zone for medical reasons?

Answer 4

Depending on the particular facts and circumstances, an extended absence from a prescribed zone may be considered temporary. You are required to determine if your absence from a prescribed zone is considered temporary. Temporaryabsences from a prescribed zone (e.g., vacations, medical leave or temporary work assignments) do not usually affect the continuity of your qualifying 6 month period. In such situations, you are still considered to live in a prescribed zone, even while you are not physically present in this zone.

Question 5

How do I know if my absence from a prescribed zone is temporary?

Answer 5

Whether your absence from a prescribed zone is considered temporary will depend on your specific facts. The longer the duration of an absence provides more of an indication that the absence is no longer temporary. Factors which may suggest that an absence is temporary could include:

• You intended to return to your residence when leaving the prescribed zone.
• You actually returned to your residence in the prescribed zone.
• Your family remained at the residence in the prescribed zone.
• You did not establish another residence outside the prescribed zone, change your mailing address, move household effects and belongings, etc.
• Your residence in the prescribed zone was available for your use throughout the absence period (e.g., the residence was not sold, rented, or otherwise occupied, and was maintained for your use at all times during the absence period).

Checklist for Northern Residents Deductions

If you are claiming the northern residents deductions (Form T2222), use the following checklist, to avoid mistakes that could cause delays to the process of your tax return.

Places of residence

• I have lived in one or more prescribed zones for a continuous period of at least 6 consecutive months beginning or ending in the year for which my tax return is being filed.

There are 2 zones, the northern zone and the intermediate zone. To find places located in the prescribed zones, go to Line 255 – Places located in prescribed zones or call the CRA at 1-800-959-8281.

• I have clearly indicated the full address where I resided in a prescribed zone (not simply a post office box number).

Deduction for travel benefits

• I have provided the names and addresses of all individuals who lived in my residence during the period(s).
• I have included in my income the taxable travel benefit received from my employer for the trip.
• I have all the receipts and other documents to support my travel expenses paid for the trip. Travel expenses include air/train/bus fares, vehicle expenses, meals, hotel or motel accommodations, camping fees, and other incidental expenses such as taxis and road/ferry tolls.
• I have the cost of the lowest return airfare available at the time of the trip between the airport closest to my residence and the nearest designated city to that airport (even if you did not actually travel by air or to that city).

The nearest designated cities are: Vancouver, BC, Calgary, AB, Edmonton, AB, Saskatoon, SK, Winnipeg, MB, North Bay, ON, Toronto, ON, Ottawa, ON, Montreal, QC, Quebec, QC, Moncton, NB, Halifax, NS, St. John, NL.

For more information

• Go to Line 255 – Northern residents deductions or call 1-800-959-8281.

Forms and publications

• Form T2222, Northern Residents Deductions for 2018
• Employment at Special Work Sites or Remote Work Locations

Link to Source:https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4650/northern-residents-deductions-2016.html