Title or working title of the regulatory initiative: Regulations Amending the Income Tax Regulations (Northern Residents Deductions)

Description of the objective: As part of the Northern Residents Deductions, the travel benefits deduction can be claimed for trips taken by the individual, or their household members living with them at the time of the trip, for vacation, family or medical reasons (maximum of two non-medical trips per person) that start from a prescribed zone. Currently, the maximum deduction for each eligible trip is the lowest of the following three amounts:

• the value of the travel benefit received from the employer;
• the actual cost of the trip (supported by receipts); and
• the lowest return airfare available at the time of the trip between the airport closest to the taxpayer’s residence and the nearest designated city to that airport.

These maximum deduction rules, including the list of designated cities, are contained in the Regulations.

The objective of this proposal is to reduce the administrative burden for taxpayers and their representatives when claiming the travel benefits deduction, specifically regarding the requirement to determine the lowest return airfare ordinarily available at the time a trip is made. The proposed amendments would instead require that a reasonable amount in respect of return airfare be obtained for the date of travel within a reasonable amount of time of when the trip is made.

Under the amended wording, the airfare amount could more easily be obtained as it could be documented prior to the date of travel and there would no longer be the requirement to ensure that it was the lowest airfare available. The airfare would still have to correspond to the day of travel.

Enabling Act: Income Tax Act

Indication of business impacts: There may be business impacts. The small business lens may apply.

The small business lens requires federal regulators to identify and take into account the needs of small businesses when designing regulations. If small businesses will be impacted, further analysis must be undertaken.

Public consultation opportunities: The Canada Revenue Agency (Agency) travelled to northern Canada in 2016 as part of the Serving You Better consultations. Senior officials met with small and medium businesses and accountants in sessions hosted by local chambers of commerce and accounting organizations in Whitehorse, Yellowknife, and Iqaluit.

As indicated in the Report on the Canada Revenue Agency’s consultations with northern residents, the Agency heard during those consultations how difficult it is to identify the lowest return airfare available at the time of a trip. In response, the Agency committed to exploring options that could help taxpayers identify the lowest return airfare.

A regulatory consultation paper detailing the proposal to simplify the lowest return airfare requirement is planned for release on Canada.ca in the fall of 2018.

Canadians will have a further opportunity to provide input when the proposed regulations are pre-published in Canada Gazette, Part I for a 30 day comment period in early 2019.

CRA contact:

Robert Greene
Director, Legislative Amendments Division
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
Telephone: 613-670-9568
Email: Robert.Greene@cra-arc.gc.ca

For more information

• Government-Wide Forward Regulatory Plans
• Cabinet Directive on Regulatory Management
• Red Tape Reduction Action Plan
• Canada–United States Regulatory Cooperation Council

To learn about upcoming or ongoing consultations on proposed federal regulations, visit the Canada Gazette and Consulting with Canadians websites.