Northern Residents Deductions

Notice to the reader

This measure has received Royal Assent.

The northern residents deductions include a residency deduction based on the number of days an individual resides in a prescribed northern or intermediate zone. For 2016 and subsequent years, Budget 2016 proposes to increase both the basic and additional residency amounts used in the calculation of the residency deduction from $8.25 to $11 per day.

1. What are the Northern residents deductions?

Currently, the northern residents deductions are available if an individual resides, throughout a period of at least six consecutive months commencing or ending in the year, in a northern or isolated area that is a prescribed northern or intermediate zone. These include both a residency deduction and a deduction for certain travel benefits.

2. What is the current residency deduction for having lived in a prescribed zone?

The basic residency amount is currently set at $8.25 for each day an individual resided in a prescribed zone. The additional residency amount is currently set at $8.25 for each day during which the individual maintained and lived in a dwelling in a prescribed zone and the individual is the only person claiming the basic residency deduction for living in that same dwelling for that period (for a total of $16.50 for each day when added to the basic residency amount). The total residency deduction for living in a prescribed zone in a year is limited to 20% of the taxpayer's income for the year.

For the days that an individual is resident in a prescribed northern zone, the deduction is based on 100% of the daily amount. For the days of residence in a prescribed intermediate zone, the deduction is based on 50% of the daily amount.

3. How does Budget 2016 propose to change the Northern residents deductions?

For 2016 and subsequent taxation years, Budget 2016 proposes to increase both the basic and additional residency amounts from $8.25 to $11 per day for the purposes of calculating the northern residents deduction.

4. Is the amount of tax deducted from my paycheque going to be affected by the proposed change?

In the coming weeks, Form TD1, Personal Tax Credits Return will be updated for 2016 to reflect the proposed increase to the amounts used to calculate the residency deduction. If you had previously claimed the residency deduction on a form TD1 that you provided to your current employer, you should complete and give them the updated form for 2016.

5. When will Form T2222, Northern Residents Deductions, be updated to reflect the proposed increase to the residency amounts?

Form T2222 will be updated for the 2016 taxation year and posted on CRA’s website by January 2017.

6. Where can I get more information on the proposed changes to the Northern residents deductions?

The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its webpages often. All new forms, policies, and guidelines will be posted as they become available.

In the meantime, please consult the Department of Finance Canada's Budget 2016 documents for details.

You can also consult information concerning Northern residents.

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