Practice with case studies
Northern residents deductions
Claiming the additional residency amount
Pre-test question
Sorry, that is incorrect.
Individuals must have lived permanently in a prescribed zone for at least six consecutive months, beginning or ending in the tax year for which they are filing a tax return.
That is correct.
Individuals must have lived permanently in a prescribed zone for at least six consecutive months, beginning or ending in the tax year for which they are filing a tax return.
Instructions
- Open the tax software
- Review the Background information and Required slips (tax slips, receipts, etc.)
- Provide all required information for the appropriate sections of the tax software
- Once completed, compare your results with the solution provided
- Afterwards, refer to the Takeaway points
Background information
Situation
Pierre and Bora are employees of Lumber Inc. in a Zone A – Prescribed Northern Zone. They also live in Zone A and are eligible to claim the Northern residents deduction for the full year. Although Pierre and Bora are both eligible to claim the basic residency amount, they have decided it is more beneficial for Pierre to claim both the basic residency amount and the additional residency amount because Bora works part-time.
Identification information
| Name | Pierre Jack |
|---|---|
| Social insurance number (SIN) | 000 000 000 |
| Address | 123 Main Street City, Province X0X 0X0 |
| Date of birth (DOB) | May 5, 1988 |
| Marital status |
Married to: |
Required slips
T4 – Statement of Remuneration Paid (Pierre) (Lumber Inc.)
Text version of the above image
T4 – Statement of Remuneration Paid
Protected B
Employer’s name: Lumber Inc.
Employee’s name and address:
Last name: Jack
First name: Pierre
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income: 43,251.00
Box 16: Employee’s CPP contributions – see over: 1,997.75
Box 18: Employee’s EI premiums: 625.66
Box 22: Income tax deducted: 6,205.00
Box 24: EI insurable earnings: 43,251.00
Box 26: CPP/QPP pensionable earnings: 43,251.00
T4 – Statement of Remuneration Paid (Bora) (Lumber Inc.)
Text version of the above image
T4 – Statement of Remuneration Paid
Protected B
Employer’s name: Lumber Inc.
Employee’s name and address:
Last name: Jack
First name: Bora
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income: 15,000.00
Box 16: Employee’s CPP contributions – see over: 555.00
Box 18: Employee’s EI premiums: 233.00
Box 22: Income tax deducted: 2,500.00
Box 24: EI insurable earnings: 15,000.00
Box 26: CPP/QPP pensionable earnings: 15,000.00
Review your results
Solution to Claiming the additional residency amount.
Takeaway points
Steps to follow
- Review their background information and required slips
- Since Pierre is claiming both the basic residency amount and the additional residency amount, make sure to use Pierre’s profile to claim the Northern residents deductions
- In Interview setup, tick the box next to Other deductions and credits (including school supply and home buyers’ amount) in the Other topics section, and the box next to Employment income and employment insurance benefits (T4, T4E/RL-6) in the Employment and other benefits section
- Click T4 and employment income in the left-side menu, then click the + sign next to T4 income (earned in any province except Quebec) and enter the required information
- Click Other deductions and credits in the left-side menu, then click the + sign next to Federal line 25500 – T2222 – Northern residents deduction
- Select Zone A (Resident of prescribed northern area) from the Area for which you are claiming the Northern residents deduction drop-down menu
- Enter the start and end dates of the northern residence into the Basic residency amount, beginning (dd-mm-yyyy) and Basic residency amount, end (dd-mm-yyyy) fields and enter 365 into the Number of days to consider for the additional residency amount field
Since Pierre is claiming the additional residency amount, Bora does not claim the basic residency amount. UFile automatically calculates the amount of the deduction and claims it on line 25500 of Pierre’s tax return.
For more information, refer to UFile instructions.
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