# Northern Residents deduction



## NorthernRaven (Aug 4, 2010)

Here's an interesting question that came up about the Northern Residents deduction (form T2222). Say a southern resident (from, say, Winnipeg) is hired by an employer in one of the territories (say, Whitehorse). The employer pays for a return ticket from Winnipeg to Whitehorse. The employee arrives and begins work in Whitehorse on May 1, and is put up in a hotel at the employer's expense. This continues for two weeks. On May 15, the employee returns to Winnipeg on the return ticket, still employed, but taking vacation leave. They disestablish their residence there (say, terminating possession of an apartment) on May 20. They return to Whitehorse by car, arriving back at work and rent an apartment (sole occupancy) on June 1, and continue in the job for the rest of the year.

The employee qualifies for the basic residency deduction for the seven months June-December, and also the additional residency amount for those seven months; that's not a problem. But does the hotel period, or even the entire month of May, qualify for the basic residency period? 

I would think probably not, although the intent was to establish residency, and there is continuous employment in the northern location, even if the the permanent accommodation was not in place until June 1. I can see how the CRA might legitimately see that the residency might be in Winnipeg for part or all of May. However, say the employee had terminated residence in Winnipeg April 30, before arriving in Whitehorse, then did everything else the same. If they aren't eligible for the basic residency, are they still considered resident in Winnipeg, even without the apartment there? It isn't a moot point; the deduction is available at different rates in two zones (A and B). If one was moving instead from the B zone (say, Grimshaw, Alberta) to Whitehorse (Zone A), one would have to be able to determine which zone to claim for during the periods in May.

As an extra twist, if the employee is eligible to claim the basic residency for the first part of May, they could also claim some of the vacation trip expenses as a northern travel deduction, but if they are only deemed to be a northern resident on June 1, this would be difficult.

I don't know if there are many northerner resident deducters here, but any tax gurus good at predicting the fiendish ways of the revenuers, please feel free to jump in...


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## Steve19 (Jun 29, 2009)

NorthernRaven said:


> The employee qualifies for the basic residency deduction for the seven months June-December, and also the additional residency amount for those seven months; that's not a problem. But does the hotel period, or even the entire month of May, qualify for the basic residency period?


I'm no tax expert, however, I would claim the basic residency deduction for May, but not the additional residency amount as it is not allowed because the dwelling (hotel) is not approved by the CRA. The CRA also states, "You can claim the basic residency amount for living at a special work site in a prescribed zone, when your principal place of residence is not in a prescribed zone." So, because you may not have moved permanently to Whitehorse until June, you still worked there in May, which I believe would count as basic residency.

http://www.cra-arc.gc.ca/E/pbg/tf/t2222/t2222-09e.pdf


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