Line 25500 - How to calculate the residency deduction

Note: Line 25500 was line 255 before tax year 2019.

There are two parts to the residency deduction:

If you are the only person in the household claiming the basic residency amount for a particular period and dwelling, you can also claim the additional residency amount.

To claim the deduction that most benefits your household, you should consider the taxable income of all the members of your household when deciding which one of you will claim the residency deduction. 

Deduction limits for the residency deduction

Example

Katie and her husband John moved from Vancouver, British Columbia, to their new house in Yellowknife, Northwest Territories, on March 15, 2021. Yellowknife is listed as a prescribed northern zone (Zone A). 

Katie and John lived in the prescribed zone for a continuous period of at least six consecutive months (March 15, 2021 to December 31, 2021 = 9.5 months [292 days]). Therefore, Katie and John are each entitled to claim the basic residency amount for 292 days in 2021. However, John does not need to claim the northern residents deductions for 2021 because he did not have taxable income in 2021.

Katie can claim $11 for each day that she lived in Yellowknife (292 days) and an additional residency amount of $11 per day because she maintained and lived in a house (which is considered a dwelling) during the 9.5 months and she is the only person in her household claiming the basic residency amount.

Katie will complete the Zone A section in "Step 2 - Calculate your residency deduction" of Form T2222, Northern Residents Deductions

If John claims the residency deduction for 2021, Katie cannot claim the additional residency amount because she is not the only person in her household claiming the basic residency amount. 

To calculate your residency deduction, complete Step 2 of Form T2222, Northern Residents Deductions, for Zone A or Zone B, as indicated in Step 1 of your form.

What is a dwelling?

A dwelling is a self-contained domestic establishment. Generally, this is a complete and separate living unit with a kitchen, bathroom, sleeping facilities, and its own private access. It includes a house, apartment, mobile home, or other similar place of residence in which a person usually sleeps and eats. It does not include a bunkhouse, dormitory, hotel room, or room in a boarding house.

Dwelling provided rent-free by an employer

We consider you to have maintained and lived in a dwelling, even if your employer let you live there rent-free and paid all the utility, maintenance, and other costs related to the dwelling. Each person living in the dwelling can claim the basic residency amount as a deduction on their return. However, if more than one person claims the basic residency amount for a particular period and dwelling, no one in that household can claim the additional residency amount for that period and dwelling.

Special work site (lines 4 and 9) 

If your principal place of residence is not in a prescribed zone, you may still qualify for all or a portion of the basic residency amount for living at a special work site provided that the site is located in a prescribed zone and you resided at the site for at least six consecutive months.

If you received non-taxable benefits for board and lodging at a special work site (shown in either box 31 of your T4 slip or box 124 of your T4A slip), your residency amounts will be reduced. Enter the amount of non-taxable benefits on line 4 or line 9 of Form T2222 unless the special work site is 30 kilometres or more from the nearest point on the boundary of any population centre that has a population of at least 40,000 individuals.

For more information about special work sites, go to Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations.

Forms and publications

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