The Updated Northern Residents Deduction

If you're a Canadian resident living in a northern zone you might be in for big tax savings. Plus with the new changes to travel benefits for 2023 you could be looking at even more back than before.

Who Qualifies:

You must reside in a northern zone for at least 6 consecutive months. The 6 month period can start in the previous year or continue into the following year. The residence must be your primary residence so working up north and living in camp does not qualify.

Northern zones are separated into Zone A and Zone B.

Zone A areas are further north and offer a higher deduction than Zone B areas.

You can find out if you live in a qualifying zone HERE.

Zone A

If you reside in Zone A you qualify for a tax deduction of $11/day for each day you resided there in 2023. If you are the only person claiming the Northern Residence Deduction for that home you qualify for an additional $11/day that you are the only person claiming the deduction for that address.

That means that if you live alone in your home in a Zone A area you would qualify for $22/day for each day you resided there.

Zone B

If you reside in Zone B you qualify for a tax deduction of $5.50/day for each day you resided there in 2023. If you are the only person claiming the Northern Residence Deduction for that home you qualify for an additional $5.50/day that you are the only person claiming the deduction for that address.

That means that if you live alone in your home in a Zone B area you would qualify for $11/day for each day you resided there.

Personal Trips Out of the Zone

Each person living in a northern zone now qualifes for a $1,200 standard travel amount per year. This allows you to claim up to 2 personal trips out of the zone per year for you or an eligible family member. These can include vacations, trips to see friends/family, or any other personal trips. This does not include medical trips.

You may also recive a taxable travel benefit from your employer you can use to claim your trips out instead of the $1,200 standard amount. To find out if you received a taxable travel benefit from your employer look for box 32 on your T4 slip.

Calculating your Trips Out Deduction

To calculate your tax deduction for your personal trips out you can claim the lesser of these 3 amounts.

1. Either your $1,200 standard amount OR the amount in box 32 of your T4 slips

2. The amount you paid for travel expenses including air, train and bus transportation, vehcile expenses, accomodations and meals

3. The cost of the lowest return airfair available at the time of the trip between the airport closest to your home and the nearest designated city airport.

Designated city airports:

• Vancouver - British Columbia

• Calgary - Alberta

• Edmonton - Alberta

• Saskatoon - Saskatchewan

• Winnipeg - Manitoba

• North Bay - Ontario

• Toronto - Ontario

• Ottawa - Ontario

• Montréal - Quebec

• Québec City - Quebec

• Moncton - New Brunswick

• Halifax - Nova Scotia

• St. John's - Newfoundland and Labrador

Medical Trips Out of the Zone

If you have to leave your zone for medical reason you are able to claim an unlimited number of medical trips out per year.

However, if you use the $1,200 standard amount to calculate your travel deduction then the maximum total amount that may be claimed for all trips taken in the year is $1,200, regardless of whether the trips were medical or non-medical. It is an amount per person, not per trip.

Eligible travel medical expenses include:

• Air, train and bus transportation

• Vehcile expenses (either a per KM amount or the actual amount paid)

• Accomodations

• Meals (either a standard meal amount per meal or the actual amount paid)

It's important to note that if you claim the medical trips as part of your Northern Residence Deduction you will NOT be able to claim them as a medical credit as well and vice versa.

Documentation In Case of a CRA Review/Audit

If CRA sends you a review letter asking for proof of your claim you will want to have the following documntation:

• Utilites bills with your northern address for each month that year

• License/ID with your northern address

• Rent/lease agreement or home ownership documentation

• If you claimed personal and/or medical trips a copy of all travel receipts for each trip if you claimed your travel expenses instead of return flight costs

• If you claimed personal and/or medical trips a screenshot with the cost of a return flight for your travel dates