The residency deduction is made up of two parts:

• the basic residency amount
• the additional residency amount

The basic residency amount is calculated from details about the individual’s address and how long they lived in prescribed Zone A or Zone B. This can be updated using the start and end dates or by the number of days in the year that they were living in a prescribed zone.

The additional residency amount can be claimed for up to the same number of days that were used to calculate the individual’s basic residency amount if:

• they lived in a dwelling in the prescribed zone during that time; and
• they are the only person claiming the basic residency amount for living in that dwelling for that period.

Under proposed changes, individuals can claim a travel deduction for costs related to vacation, family or medical travel that started from a prescribed zone and was taken by themselves or an eligible family member, even if neither received a taxable travel benefit for that trip.

Under proposed changes, an eligible family member is someone who lived with the individual at the time of the trip and was one of the following:

• their spouse or common-law partner,
• their or their spouse or common-law partner's child under the age of 18,
• another individual who is wholly dependent for support on the individual, their spouse or common-law partner, or both, and who is either:
  • the individual's or their spouse or common-law partner's parent or grandparent,
  • related to the individual and wholly dependent by reason of mental or physical infirmity.

To calculate the travel deduction, the individual can use either the value of the taxable travel benefit received from employment (if any) or, under proposed changes, a portion of the $1,200 standard amount.

The maximum deduction an individual can claim for each eligible trip is the lowest of the following three amounts:

• the value of the taxable travel benefit received from employment (if any) or, under proposed changes, the portion of the individual's or their eligible family member's $1,200 standard amount that is allocated to the trip
• the total travel expenses paid for the trip using either the detailed or simplified calculation methods
• the cost of the lowest return airfare available at the time of the trip, between the airport closest to their residence and the nearest designated city to that airport (even if they did not actually travel by air or to that city)

If an individual uses the standard amount to calculate a travel deduction for themselves or an eligible family member, the maximum total amount that may be claimed for all trips taken in the year by that individual is $1,200, whether the trips were medical or non-medical, and regardless of who (the individual or an eligible family member) is claiming the travel deduction. It is an amount per person, not per trip.

If the individual (for themselves or an eligible family member) uses the taxable travel benefit received from employment to calculate a travel deduction in a year for an individual, then nobody (including the individual) can use any part of that individual's $1,200 standard amount to calculate a travel deduction for a trip taken by that individual.

An individual cannot claim a travel deduction if one of the following applies:

• they or their eligible family member received or was entitled to receive non-taxable amounts as travel assistance, travel allowance, or reimbursement for travel expenses
• someone else has already claimed the deduction for travel benefits for this trip on their return

Under proposed changes, an individual can claim up to two trips that they and each eligible family member took for non-medical personal reasons, and any number of trips that they or an eligible family member took for medical purposes. However, no more than two non-medical personal trips taken by each person (the individual or an eligible family member) can be claimed in total for the year by all taxpayers.

If the individual is claiming a deduction for medical travel on form T2222, no one can claim it as a medical expense on their return.

For detailed information, including meal and vehicle flat rates, as well as the list of nearest designated cities for the lowest airfare, refer to form T2222, Northern residents deductions.

Slips required:

• T4 – Statement of Remuneration Paid (Lumber Inc.) – Pierre Jack

• T4 – Statement of Remuneration Paid (Lumber Inc.) – Bora Jack

Pierre and Bora are employees of Lumber Inc. in a Zone A – Prescribed Northern Zone. They live in Zone A and are allowed to claim the Northern residents deduction for the full year.

Points to remember:

• Although Pierre and Bora are both entitled to claim the basic residency amount, in this case, they have decided that it is more beneficial for Pierre to claim both the basic residency amount and the additional residency amount since Bora works part-time




• To enter the T2222 information, click Other deductions and credits in the left side menu and click the plus + sign next to Federal line 25500 – T2222 – Northern residents deduction on the Other deductions and credits page
  
  
  • Select Zone A (Resident of prescribed northern area) to the statement, Area for which you are claiming the Northern residents deduction
  • Enter Bora Jack in the field Full names of other residents at the same address

  
  

  • Enter the Start and end dates of the northern residence under Basic residency amount, beginning (01-01-2021) and Basic residency amount, end (31-12-2021)
    
    
    • The Number of days to consider for the basic residency amount does not need to be completed since a start and end date were provided

    
    

    • Enter 365 for the Number of days to consider for the additional residency amount. (Pierre should claim the additional residency amount. Bora should not claim the basic nor the additional residency amounts.)

Information slip for Pierre:

T4 – Statement of Remuneration Paid (Lumber Inc.)

Information slip for Bora:

T4 – Statement of Remuneration Paid (Lumber Inc.)

T2222 - Northern Residents Deductions for 2021

Slip included:

• T4 – Statement of Remuneration Paid

Paul is an employee of Northern Mining in a Zone A – Prescribed Northern Zone. Each year, he works at the mine for six months, so he is eligible to claim 184 days for the basic residency amount and the additional residency amount. Paul received the following taxable amounts from his employer:

• Board and lodging allowance: $7,200 (box 30 of the T4 slip)
• Travel assistance in a prescribed zone: $1,000 (total taxable travel benefits from box 32 of the T4 slip, minus any amount received for medical travel from box 33 of the T4 slip)
• Medical travel assistance: $1,500 (box 33 of the T4 slip)

Paul has provided us with the lowest quoted cost for each trip’s return airfare (using the designated city list found on form T2222) as well as the actual cost of his travels.

• Quote for the trip for medical travel: $1,500
• Actual cost of the trip for medical travel: $1,780
• Quote for the trip for other reasons: $1,000
• Actual cost of the trip for other reasons: $1,250

For the travel benefits, Paul choses to claim the employer paid benefits instead of the standard amount ($1,200 total for all trips in the year, under proposed changes) as it is more beneficial for him. Individuals can choose either the standard rate for all trips or the employer paid benefits for all trips, but not both.

Points to remember:

• Although Paul is over the recommended income threshold, the organization running the tax clinic for the CVITP has modified the minimum amount to $50,000 due to their local economic environment and the population they serve
• To enter the T2222 information, click Other deductions and credits in the left side menu and click the plus + next to Federal line 25500 – T2222 – Northern residents deduction on the Other deductions and credits page
  
  • Select Zone A (Resident of prescribed northern area) as your response to, Area for which you are claiming the northern residents deduction
  • Enter Paul's Northern residence address (if different from current address) as: Box 1000, Northern Village, Ontario X0X 0X0
  • Enter the Start and end dates of the northern residence under Basic amount, beginning (01-05-2021) and Basic residency amount, end (31-10-2021)
    
    • The Number of days to consider for the basic residency amount does not need to be completed since a start and end date were provided
    • Enter 184 for the Number of days to consider for the additional residency residency amount (Paul can claim the additional residency amount because he lived in a prescribed zone for an eligible period of time and he is the only one from that dwelling claiming the basic residency amount for that same time period)
• Paul had a Deduction for travel benefits.
  
  • Select Zone A (Resident of prescribed northern area) as your response to, Northern area where you travelled
  • Select Other as your response to, Purpose of the trip to a northern area
  • Enter Paul Matthews in the field Name of the person who travelled to or from the northern destination
  • Enter $1,000 in the field for 1 – Employee benefits with respect to northern travel.
  • Enter $1,250 in the field for 2 – Northern travel expenses, under Plane. This is the cost of the actual ticket he paid
  • Enter $1,000 in the field for 3 – Lowest return air fare for the northern area travel. This is the lowest cost quoted.
• Add an additional trip by clicking + Add Another and enter the following information for the medical trip he took.
  
  • Select Zone A (Resident of prescribed northern area) as your response to, Northern area where you travelled
  • Select Medical reasons as your response to, Purpose of the trip to a northern area
  • Enter Paul Matthews in the field Name of the person who travelled to or from the northern destination
  • Enter $1,500 in the field for 1 – Employee benefits with respect to northern travel
  • Enter $1,780 in the field for 2 – Northern travel expenses, under Plane. This is the cost of the actual ticket he paid
  • Enter $1,500 in the field for 3 – Lowest return air fare for the northern area travel. This is the lowest cost quoted

Information slip for Paul:

T4 – Statement of Remuneration Paid (Northern Mining)