Simplified Northern Residents Travel Deduction webinar
Simplified Northern Residents Travel Deduction
Nathalie: Hi, my name is Nathalie. I work at the Canada Revenue Agency, also known as the CRA.
Welcome to the webinar of the pilot project to introduce the new simplified northern residents travel deduction.
I’m very happy to be here today to talk to you about the new Lowest Return Airfare tool.
Nathalie: I would like to begin by acknowledging that I am present on land, located in Ottawa, that are on the unceded, un-surrendered Territory of the Anishinaabe Algonquin Nation.
Given that we are meeting virtually, I also want to acknowledge the lands on which you are gathered from coast to coast and invite you to take a moment of silence to have a thought for the territory in which you find yourself.
We respect and affirm the inherent and Treaty Rights of all Indigenous Peoples across this land. We acknowledge the historical oppression of lands, cultures and the original Peoples in what we now know as Canada and we work to contribute to the healing and decolonizing journey we all share together.
Nathalie: If you are a tax preparer with clients who claim the northern residents travel deduction or a northern resident who has had difficulty come tax time determining the lowest return airfare for a trip you took, you are in the right place.
Today, we will cover:
- The simplified northern residents travel deduction pilot project
- Who qualifies for the northern residents travel deduction
- How to claim the travel deduction
- How much can someone claim as part of the northern residents travel deduction
- What is the Lowest Return Airfare
- How to find the Lowest Return Airfare
- Our new Lowest Return Airfare table
- And how to use our new Airfare tables
I will conclude today’s presentation by going over an example to make sure everyone can see how this information can be useful in a practical scenario.
Introducing the pilot project for the simplified northern residents travel deduction
Nathalie: We are here today to introduce to you a pilot project, the simplified northern residents travel deduction.
- We heard from many northern residents who told us that determining the lowest return airfare was difficult.
- It is easy enough to forget the need to document the lowest return airfare between the airport closest to your home and the nearest designated city on the day you travel.
- This is why we are pleased to be here today to tell you about a new method you can use to find the lowest return airfare. This new method takes the form of tables that you can use to find the lowest return airfare and make it easier for you when it comes time to claiming the travel deduction.
- But first let’s go over some of the basics of the travel deduction.
Do you qualify for the travel deduction?
Nathalie: As you can see here, there are certain eligibility requirements people need to meet to be able to apply for the travel deduction.
You are required to:
- Live for a continuous period of at least six consecutive months in the:
- Prescribed northern zone (Zone A) or;
- Prescribed intermediate zone (Zone B)
You can find more information about the prescribed zones on Canada.ca.
To qualify for the travel deduction, you must have:
- Taken the trip yourself or the trip had to be taken by an eligible family member, and
- Started the trip from within a prescribed zone
In terms of the type of travel that allows you to qualify for the travel deduction, you must have:
- Traveled for medical or personal reasons such as vacation or to visit family.
So this means that various types of travel are eligible here.
How to claim the travel deduction
Nathalie: There are a couple of key things that you need to know in order to claim the travel deduction.
You must fill out the Form T2222, Northern Residents Deductions.
On it you are required to provide three amounts for each eligible trip:
- The taxable travel benefits that were received from an employer OR the portion of the $1,200 standard amount you want to allocate to that trip.
- the total travel expenses paid for the trip
- and, the lowest return airfare
There are also some examples provided on the form. I encourage you to read the examples to help you understand what information is needed.
The form also provides a checklist, identifying what is meant by lowest return airfare and gives the list of designated cities. Please remember to go through the checklist as it is designed to help make sure you are providing all the information that’s needed.
How much can you claim as a travel deduction?
Nathalie: There is a maximum deduction you can claim for each eligible trip.
Of the three amounts we mentioned on the previous slide:
- taxable travel benefits received from employment or the $1,200 standard amount
- the total travel expenses paid for the trip
- the cost of the lowest return airfare
The deduction amount you can claim will be the lowest of the three amounts.
We will go over this again later in the webinar when we walk you through some examples.
Also to note here:
You can claim :
- up to two personal trips that you took
- up to two personal trips taken by each eligible family member
- any number of medical trips taken by you or an eligible family member.
It is important to remember, however, that no more than two non-medical personal trips taken by an individual (themselves or an eligible family member) in a year can be claimed by all taxpayers.
What is the lowest return airfare (LRA)?
Nathalie: Now that we’ve gone over the type of trips that qualify for the travel deduction, let’s take a moment to define the lowest return airfare, or LRA.
The LRA is the cheapest round trip airfare available around the time of your travel between the airport closest to your residence and the nearest designated city.
The list of designated cities can be found on canada.ca, and also they are part of the Northern Residents Deductions checklist.
Some of you are likely asking yourself, “How does this work for me because we didn’t fly when we took our vacation this year, we drove.
Or, you might be thinking, “we didn’t travel to any of these cities.”
Whether you flew or drove, went to a designated city or not, the rule still applies.
How to find the LRA
Nathalie: Now we are getting to the part I mentioned at the beginning of the presentation.
We determined that to claim the travel deduction, you need to provide an amount for the lowest return airfare, which is the cheapest round trip airfare available around the time of your travel between the airport closest to your residence and the nearest designated city.
There are now two different methods you can use to determine the lowest return airfare.
There is the existing method of tracking the LRA yourself that has been in place since the introduction of the travel deduction.
There is also a new method, the simplified northern residents travel deduction that introduces the lowest return airfare tables so you can determine this amount according to when you travelled.
We will take the next few slides to go through the different methods.
Existing method – Tracking the lowest return airfare
Nathalie: By using the existing method, you will need to track the LRA yourself. You will be required to identify the cheapest round-trip airfare available when travel began, between the airport closest to your residence and the nearest designated city.
When using this method, it is possible that we request that you submit documents to support the amount that you claimed as the lowest return airfare.
That said, as part of the changes we are making with the simplified northern residents travel deduction, northern residents will now have the option of using the airfare tables or providing a valid LRA quote or the cost of economy return airfare tickets bought before the day of travel.
It could also be preferable to use this method if you must fly by charter. That is because the inclusion of charter flights is not something that can be done with the second method.
New method – Using the LRA tables
Nathalie: Why a simplified northern residents travel deduction? What is the point of the lowest return airfare tables you might ask?
We wanted there to be a simple and easy-to-access way for northern residents to determine the lowest return airfare.
We looked to find a new method, a new tool that was comprehensive, dependable, easy to use and one that doesn’t require northern residents to submit any documents in support of the claim.
What are the airfare tables?
Nathalie: So what are these new lowest return airfare tables?
The tables, located on Canada.ca/lowest-return-airfare, provide you with a new method to determine your lowest return airfare.
In the tables, you will find
- the lowest level of economy fares that are ordinarily available for locations over six-month periods. From October to March, and April to September.
- and more than 135 eligible airports with scheduled flights to a designated city
New tables will be published every April and October to reflect changing airfares during the year.
From the sample table shown in the slide, you can see that the province or territory is identified for each of the airports, the nearest designated city to that airport, and the amount associated .
There are also filters to help you navigate the tables. You can sort by province or territory, by airport or by designated city.
We invite you to try the different filters so you can see what works best for you.
How to use the airfare tables
Nathalie: Let’s take a closer look at how you can use the tables to determine your lowest return airfare.
- The first thing you need to do is find and open the table that matches the period of time when travel began for the trip being claimed.
- Once you are there, go through the table and locate the airport closest to your residence. You will see that the nearest designated city to this airport is identified. Using the table filters can help narrow it down. And you can also search for any specific airport near you, to see if we have a lowest return airfare you can use for that airport.
- Once you are in the table that includes the month you traveled, you have the airport nearest your residence, you will see the associated airfare amount, in the right column.
- You can use the amount associated with that airport as your lowest return airfare to complete Chart B-Column 5 of your form T2222
The LRA when flying by charter
Nathalie: Before we get to the example, let’s take a minute to talk about what you need to provide when you take a charter flight.
For some remote communities, a charter flight might be the only option.
In this case, as part of the lowest return airfare, you can submit quotes or costs for round-trip, charter flights to the nearest airport that has scheduled commercial flights to the nearest designated city.
The costs for charter flights will not be accepted as part of the lowest return airfare when it is possible for someone to drive to the nearest airport that has scheduled commercial flights to the nearest designated city.
This is true except in cases that it is not reasonable to drive to the nearest airport.
Also, only the amount paid to take a charter flight will be accepted as part of a trip expense.
Example – Claiming the travel deduction
Nathalie: Now that we have the basics, let’s walk through an example.
She has been living in Rankin Inlet, Nunavut, for the past three years.
She travelled from Rankin Inlet to Iqaluit, Nunavut, to visit family on February 28 and returned on March 16.
As a northern resident, she would like to claim the travel deduction she is entitled to.
To calculate the travel deduction, Elisapie needs to first figure out the three required amounts and enter them on Form T2222.
Example – Claiming the travel deduction (Cont’d)
Nathalie: First, Elisapie will calculate the cost of travel. Her flights cost $1,633, and she did not have any other travel expenses.
Elisapie received a taxable travel benefit of $1,000 from her employer. Since she did not take any other trips in the same year, she decides to use the full $1,200 standard amount instead of the taxable travel benefit she received from her employer, because that benefit is less than the $1,200 standard amount.
Although Elisapie did not travel to the nearest designated city nor did she leave the territory, she still has to determine the lowest return airfare available at the time of her trip. Elisapie did not obtain a quote before she traveled. However, Elisapie checks the lowest return airfare table and uses the airfare table amount.
According to the airfare table, the lowest return airfare amount for Rankin Inlet to Winnipeg is $3,143.
Example – Claiming the travel deduction (Cont’d)
Nathalie: Now that Elisapie has obtained the three amounts, she can calculate her travel deduction. The maximum that Elisapie can claim is the lowest of the following three amounts:
- the taxable travel benefits of $1,000 or the $1,200 standard amount -$1,200
- the total travel expenses paid for the trip - $1,633
- the lowest return airfare - $3,143
The CRA would accept Elisapie’s amount for the LRA, because she chose to use the airfare table amount.
Elisapie will be able to claim $1,200 for her trip, because it is the lowest of the three amounts.
Do you have any feedback?
Nathalie: The simplified northern residents travel deduction and the airfare table are a pilot project that are open for any feedback or comments.
Please email us at the email you see on the screen if you would like to provide any feedback regarding the Simplified northern residents travel deduction or the airfare tables.
If you have any questions specific to your situation, you can call your Northern Service Centre at 1-866-426-1527 or the individual tax enquiries line at 1-800-959-8281.
Nathalie: And that’s all for me! This is the end of our webinar. Thank you so much for joining us today! We hope it was helpful!
We also encourage you to visit our Upcoming Events page at canada.ca/cra-outreach-events to view and register for any of our upcoming webinars.
Thank you for listening and enjoy your day!
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