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How to Calculate Travel Benefits for the Northern Residents Deduction

Are you relocating to the north for employment?  You may be able to claim the Northern Residents Deduction on your personal Income Tax and Benefit Return. If you lived in a prescribed zone on a permanent basis for a minimum of six straight months, you most likely qualify for the deduction. If you incur travel expenses while travelling to the north for work, it’s important to know the “lowest of the three” rule to make sure you claim the correct amount on your income tax return.

If you relocate up north for work you may be eligible for a tax deduction.

Qualifying Standard

According to Canada Revenue Agency, to qualify for Northern Resident Deductions , you “must have lived, on a permanent basis, in a prescribed northern or intermediate zone for a continuous period of at least six consecutive months.”

There may be a limit to the deduction you can claim.

• If you lived in a prescribed northern zone, you can claim the full amount of the deduction.
• However, if you only lived in a prescribed intermediate zone, you can only claim half of the deduction.

While the Northwest Territories, Nunavut and the Yukon are located in prescribed northern zones, places in other provinces may be considered Northern or Intermediate depending on where they’re located. CRA has a complete list of zone A and zone B locations.

Calculating the Northern Residents Deduction

A lot of taxpayers aren’t aware of this deduction, and there are two deductions you can claim:  one for residency for living in a prescribed zone , and  a second deduction for travel benefits received from your employer . Travel benefits refer to those included in your paycheque and shown on your tax slip. The taxable travel benefit amount received  from your employment in the prescribed zone will be shown in Box 32 or 33 of your  T4 slip , or in Box 028 or Box 116 of your  T4A slip . To calculate all three components of the Northern Residents Deduction, you’re required to complete  Form T2222 – Northern Residents Deductions.

Travel Benefits Explained

Employers sometimes compensate employees for travelling to and from a prescribed northern zone.

When that’s the case, you’ll receive a travel benefit from your employer to help offset the cost of commuting up north from your closest designated city. To claim the deduction, your employer must pay your regular annual earnings, plus a travel benefit.  CRA doesn’t allow you to claim the deduction if travel benefits are included in your salary . Your employer can reimburse you after a trip or based on a previously agreed-upon amount.

The Lowest of the Three Rule

Normally, travel benefits received from your employer are considered taxable benefits . But, you can claim some of your travel expenses under certain circumstances. Travel expenses include air travel, bus, train, meals and lodging.

The “lowest of the three” rule says you can claim the lowest of these three amounts:

• The travel benefit found on box 32 of your T4 slip
• The total of your travel expenses
• The lowest return airfare available at the time of the trip between the airport closest to your Northern residence and the nearest city.

CRA defines the lowest return airfare available at the time of the trip as “the lowest return airfare for regularly scheduled commercial flights on the date that the travel began.” It also includes any GST/PST and airport taxes.

Additional charges such as the following are not considered part of the lowest return airfare:

• flight cancellation insurance
• baggage surcharges

You can also claim benefits for medical-related travel on box 33 of your T4 slip.  This generally refers to the cost of transportation to the place where medical treatment is available, plus reasonable meal, vehicle and accommodation expenses if they’re directly related to medical treatment and no substantially similar treatment is available closer to home.

There is no limit to the number of medical travel claims you can make in a year, but there’s  a limit of two trips per year for non-medical-related travel .

What Edition of TurboTax Is Right for Me?

Whether business income, rental property or capital gains, TurboTax has the right software for you Answer a few simple questions on our  product recommender  and we can help guide you to the right edition that will reflect your individual circumstances.

You can always start your return in  TurboTax Free , and if you feel the need for additional assistance, you can upgrade to any of our paid editions or get live help from an expert with our  Assist & Review  or  Full Service *. But don’t worry, while using the online version of the software when you choose to upgrade, your information is instantly carried over so you can pick up right where you left off.

*TurboTax Live™ Full Service is not available in Quebec.

• Photo Credits – DC Productions/Digital Vision/Getty Images

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Have questions about travel?

Contents: Travel insurance

• Emergency Medical Care
• Trip Cancellation or Interruption coverage
• Visitors to Canada
• Top-Up insurance
• Cancellations and refunds
• Compare travel coverages
• Flight Delay Service
• Baggage loss coverage
• Accidental Death and Dismemberment
• Optional Protection: Pandemic
• Travel advisories
• Travel insurance eligibility
• How to choose travel coverage
• Pre-travel checklist
• Comprehensive
• Travelling in Canada
• Study abroad
• Family vacations
• Weekend getaways
• Backpacking
• Winter escapes
• Romantic retreats
• Travel policy

COVID-19 travel questions

If i test positive for covid-19 while travelling, what am i covered for, for medical emergencies.

You will be covered for emergency medical expenses if you have not had any symptoms or a diagnosis in the 90 days before your departure date. If you test positive during your trip, you will be covered for the cost of taking a COVID-19 test when prescribed by a physician following a medical emergency or sudden illness.

For when you or travel partner test positive for COVID-19 and need to stay at your destination

Some costs related to COVID-19 may be covered. If you purchased Trip Cancellation or Interruption coverage before November 1, 2022 or Optional Protection: Pandemic coverage , your insurance contract will be extended free of charge for:

• the period you are unable to board, and
• the following 24-hour period when your return home is postponed due to a positive COVID-19 test or contact tracing

Will I have coverage for COVID-19 if I test positive while travelling within Canada?

If you are sick or injured due to COVID-19 while travelling within Canada, most costs will be coordinated through your provincial health plan, but not all. For example, if you are hospitalized within Canada:

• hospital and physician expenses are covered by provincial health plans
• air ambulance expenses are not covered by provincial health plans
• transfer to another hospital to your home province to the nearest facility may be considered when medically necessary

You could be subject to another provincial government restriction. For example:

• you may be refused entry
• you may need to self-isolate as you enter the province and when you return to your home province

Emergency travel benefits do not cover quarantine expenses. We encourage you to check the government recommendations and restrictions for the province you are travelling to closer to your travel date.

What happens if I need to quarantine at my destination?

If you or your travel partner test positive for COVID-19 during your trip and you need to stay at your destination, your insurance contract will be extended free of charge for:

• the following 24-hour period when your return home is postponed due to a positive COVID-19 test or contact tracing.

Does Alberta Blue Cross ® cover COVID-19 testing at my destination or prior to boarding my flight home to Canada?

The cost of taking a COVID-19 test while travelling is covered when prescribed by a physician following a medical emergency or sudden illness.

Will I be reimbursed by Trip Cancellation or Interruption insurance if my travel agency or airline offers me a travel credit?

No, you will not be able to submit a claim for this amount if your service provider (travel agency or airline) offers a travel credit.

If I have been previously diagnosed with COVID-19, am I still eligible to buy travel insurance?

You are eligible to purchase travel coverage if you haven’t been diagnosed with COVID-19 and you aren’t showing symptoms of COVID-19 within the 90 days prior to your departure date.

I purchased and received a COVID-19 vaccine in another country. Can I claim the cost on my Alberta Blue Cross ® benefit plan?

COVID-19 vaccinations can be claimed under your Health Spending Account as long as they are submitted with all the required information, such as the pharmacy receipt, Drug Identification Number (DIN), patient’s name and any other relevant information.

Will I have emergency medical coverage if I go on a cruise?

Yes, the Government of Canada lifted its notice advising Canadians to avoid all cruise travel. Emergency medical coverage will cover you if you get sick or injured due to COVID-19.

Am I covered if I travel to Ukraine or Russia?

There are some limitations to your coverage in the event of war. Please give our travel specialists a call at 1-800-394-1965 .

Do you have travel insurance plans for seniors and snowbirds?

Yes we do! We have single-trip emergency medical plans , Trip Cancellation or Interruption coverage, Baggage loss coverage , and Accidental Death and Dismemberment for seniors. Whether escaping the snow to go to Arizona or adventure-seeking in Europe, seniors can get coverage with Alberta Blue Cross ® .

Should I purchase travel insurance while travelling in Canada?

We recommend purchasing travel insurance when travelling within Canada. Medically necessary health care services—hospital care and physician services—are typically covered in other provinces, but additional services like ambulance, hospital transfers, air ambulance and repatriation to your province are not covered. The additional coverage provided by our medical travel insurance goes beyond what is covered by the provincial government and helps keep medical costs in check.

Does my vaccination status affect my premiums?

No, your vaccination status does not affect whether you are eligible for insurance or your premium costs.

Changing travel plans

Can i change the dates on my travel insurance contract.

If you purchased travel insurance through a broker or travel agency, it's best to call them to confirm. If you purchased a plan directly from us, give our travel specialist a call at 1-800-394-1965 .

I already purchased Alberta Blue Cross ® travel insurance, but I decided to stay longer than planned—what should I do?

Our single-trip and multi-trip annual plans can be extended. For a single-trip, you’ll need to call us before the return date of your original travel agreement. For multi-trip annual plans, you need to call us before the trip exceeds the maximum stay of your annual plan.

I already have travel insurance included in my Alberta Blue Cross ® employer or personal health plan, but I am travelling longer than it allows. Can I get the additional days’ coverage I need from you?

Of course you can! We will also give you a discount for this extension—just for being a valued Alberta Blue Cross ® member. Unfortunately, you can’t purchase your additional days of travel online, but please give us a call at 1-800-394-1965 and we can set you up. Make sure you call prior to the end of the existing trip limit on your employer or personal health plan.

Learn more about Emergency Medical Care coverage

What is covered by emergency medical insurance.

It covers medical or related expenses caused by an accident or emergency when you’re outside of Alberta. Our emergency medical travel insurance covers medical costs up to $5 million with optional deductibles to reduce premiums. Covered costs can include:

• hospital services
• health care professional expenses
• prescriptions and diagnostic services
• medical appliances
• emergency dental services
• meals and accommodations
• return flights because of medical delays
• return of dependents, pets, personal items and vehicles

Does emergency medical insurance cover COVID-19-related expenses?

Emergency medical insurance will cover the cost of taking a COVID-19 test when prescribed by a physician following a medical emergency or sudden illness.

Can I add Trip Cancellation or Interruption coverage?

You can add it to our Emergency Medical Care plan. If you have existing coverage through your employer, you can still add Trip Cancellation or Interruption coverage to further protect your trip.

Do you provide Emergency Medical Care to seniors?

We provide quality medical coverage for seniors. Review our coverage options or give us a call to learn more.

What trip activities are covered?

Our travel plans are designed for Albertans looking to enjoy a relaxed vacation, so depending on the kinds of activities you want to do, there is a limit on what Alberta Blue Cross ®  will cover. Activities that we consider to be extreme sports will not be eligible for coverage should you get hurt. In other words, if it’s not considered a traditional sport, or it’s made extreme and dangerous by modifying the equipment or locale, the claim isn’t likely to be covered. Here are some examples of extreme sports:

• ballooning or parachuting
• bungee jumping
• climbing or mountaineering, rock climbing
• hang gliding, gliding
• heli-skiing
• rodeo activity
• white water rafting
• para-gliding
• para-sailing
• amateur scuba diving, unless you hold at least a basic scuba diving license from a certified school
• downhill skiing or snowboarding outside marked trails

Be sure to read the exclusions, limitations and definition section of your contract for more details.

Learn more about Trip Cancellation or Interruption coverage

Is covid-19 an eligible reason for trip cancellation or interruption.

Some costs related to COVID-19 may be covered. If you purchased Trip Cancellation or Interruption coverage before November 1, 2022 or Optional Protection: Pandemic coverage , you could be covered when:

• you test positive for COVID-19 before you leave and need to postpone your trip
• you test positive for COVID-19 during your trip and need to extend your stay

See your travel insurance policy for more information.

If you wish to cancel or postpone your trip due to COVID-19, first contact your service provider (e.g., travel agency or air carrier) that sold your trip to request a refund or postponement. Then, please contact our customer service agents to explain your situation.

Trip Cancellation or Interruption coverage purchased after November 1, 2022 without Optional Protection: Pandemic coverage will not cover costs due to COVID-19 or any other pandemic.

Am I covered if my flights are delayed due to weather?

Bad, unpredictable weather is the cause of many flight delays or cancellations. If you purchased a travel insurance plan from us, it includes Flight Delay Service . This service offers access to an airport lounge, hotel room or per person allowance, depending on how long the delay is.

When should I buy Trip Cancellation or Interruption coverage?

It’s best to buy as soon as you book your trip. Cancellation insurance protects you from unexpected circumstances that arise before you leave.

Can I add this to my existing medical travel insurance plan?

You can add Trip Cancellation or Interruption coverage to your existing medical travel insurance plan, whether it’s through your employer or a personal plan.

Get a quote

Finding the right coverage you need for your trip starts with a quote. Get started online or give our travel team a call. We are here to help you.

The tax deadline is in:

What’s new for travel deductions for northern residents?

March 1, 2022.

Do you live in a northern part of Canada? Northern residents have some good news for their 2021 tax returns! Travel deductions have been expanded so more residents can claim their expenses for trips to and from northern regions. Keep reading to learn more about the updated deductions for northern residents.

What are deductions for northern residents?

What’s new for the travel benefits deduction, what do i need to claim this deduction, what’s a designated city, how do i know if i live in a prescribed zone, what if i recently moved to a prescribed zone.

If you lived in the northern regions of Canada for at least 6 consecutive months , you might be able to claim a residency deduction and/or a deduction for travel benefits on your return. These deductions are designed to help offset the additional costs of living in a remote area by lowering the amount of taxes you owe.

You can claim these deductions on your return using the northern residents deduction (T2222) form . If you're a Québec resident, you can also claim the related provincial deductions with form TP-350.1-V . To learn more about northern residents deductions, visit the H&R Block Online Help Centre .

In previous years, you could only claim the travel benefits deduction (or travel deduction, if you’re a Québec resident) if you worked in a prescribed zone and paid for trips outside of your region for which you received a taxable travel allowance from your employer. Now, you can claim a deduction for personal trips on your 2021 return, even if you’re not employed.

If you or someone in your household travelled within Canada during the year, you can claim the cost of up to 2 trips for each family member . If you travelled for medical reasons, there’s no limit on the number of trips you can claim.

The amount you can claim is the lowest of the following amounts:

• The cost of your trip (including what you paid for transportation and accommodations)
• The lowest return airfare to the closest designated city when you took your trip
• Up to $1200 per family member

Keep in mind, if you received a taxable travel allowance from your employer, you can still claim your taxable travel benefits like last year. Visit the H&R Block Online Help Centre to learn more about claiming taxable travel benefits.

Note: If you get a non-taxable travel allowance or any other non-taxable travel assistance from your employer, you can’t claim the travel benefits deduction on your return.

You’ll claim this deduction when you prepare and file the northern residents deduction (T2222) form with your 2021 return. You’ll need:

• The date your trip began (to calculate the lowest return airfare between where you travelled and a designated city)
• Receipts for your transportation (for example, air, train, bus fare or vehicle expenses)
• Receipts for your accommodations (for example, the cost of your motel or hotel)

If you don’t have your receipts, there’s a simplified method you can use to calculate your meal and vehicle expenses, but there is no simplified method for other expenses.

If you chose to go with the simplified method to claim your meals, you can claim $22 per meal for up to three meals a day (tax included). When it comes to claiming your vehicle expenses, you can claim a per-kilometer rate for how far you traveled. Keep in mind, the rate you can claim will depend on which province and territory you started your travel from. Even though you don’t have to hold onto your receipts, you should still hang onto documentation that can support your claim(s).

​​A designated city is the city closest to where you live. You can’t claim more than the cost of the lowest return airfare to that city on the day you took your trip (even though you may not have travelled to that city or even travelled by air). The designated cities are:

• Vancouver, BC
• Calgary, AB
• Edmonton, AB
• Saskatoon, SK
• Winnipeg, MB
• North Bay, ON
• Toronto, ON
• Montréal, QC
• Moncton, NB
• Halifax, NS
• St. John's, NL

For all northern residents deductions, where you live determines how much you can claim. For example, you can claim the deduction amounts in full if you live in a prescribed northern zone (Zone A) . If you live in a prescribed intermediate zone (Zone B) , you’re only eligible for half of the deduction amounts.

To find out if you live in a prescribed zone, check the following list from the CRA and Revenu Québec:

• Northern zone (Zone A)
• Intermediate zone (Zone B)
• Northern zone (Zone A) – Québec only
• Intermediate zone (Zone B) – Québec only

If you recently moved but haven’t lived in a prescribed zone for at least 6 months, you can file your 2021 return without claiming your deductions. Once you qualify, you can request to change your return and claim your deductions retroactively. If you filed your return using H&R Block’s Do It Yourself tax software , adjusting your return is even easier with our ReFILE feature .

Ready to file? H&R Block makes sure you get the maximum refund*. Get help from the largest network of reliable Tax Experts by choosing one of four convenient ways to file: File in an Office , Drop-off at an Office , Remote Tax Expert , or Do It Yourself Tax Software .

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Reasonable per-kilometre allowance

If you pay your employee an allowance based on a per-kilometre rate that is considered reasonable, do not deduct CPP contributions, EI premiums, or income tax.

The per-kilometre rates that the CRA usually considers reasonable are the amounts prescribed in section 7306 of the Income Tax Regulations. Although these rates represent the maximum amount that you can deduct as business expenses, you can use them as a guideline to determine if the allowance paid to your employee is reasonable. The type of vehicle and the driving conditions are other factors used to determine whether an allowance is considered to be reasonable. 

The CRA considers an allowance to be reasonable if all of the following conditions apply:

• The allowance is based only on the number of business kilometres driven in a year
• The rate per-kilometre is reasonable
• You did not reimburse the employee for expenses related to the same use of the vehicle. This does not apply to situations where you reimburse an employee for toll or ferry charges or supplementary business insurance, if you determined the allowance without including these reimbursements

When your employees fill out their income tax and benefit return, they do not include this allowance in income.

Reasonable allowance rates

For 2024, they are:

• 70¢ per kilometre for the first 5,000 kilometres driven
• 64¢ per kilometre driven after that

In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometer allowed for travel.

For prior-year rates, see Automobile allowance rates .

You own a consulting firm. You have ten employees and four out of ten are engineers and are often on the road. The company does not own any vehicles. The engineers use their own vehicles when they are on the road for work. The company pays them an allowance based on the reasonable per-kilometre rate prescribed in section 7306 of the Income Tax Regulations.

In this example, the allowance is not considered a taxable benefit because: 

• the allowance is based on the number of business kilometres driven in a year
• the rate per kilometre is considered reasonable
• the employee is not reimbursed for expenses related to the same use of the vehicle

The allowance should not be included in the employees' income.

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