All the Numbers

Northern residents deduction

From the All the Numbers wiki · Tax

Someone who lives at least six months in a prescribed northern zone deducts an amount for each day there when working out taxable income (line 25500). Yukon, the Northwest Territories and Nunavut are northern zones in full.[1]

The rules

$11 a day lived in the zone, and $11 more a day for keeping and living in a home there. Only one person in a home claims the second amount. The total is capped at 20% of net income.[2] The daily amounts are fixed in the statute: they grow with the plan's rate by default and stay put under the law as written.

In the plan

Every adult in the plan lives in the territory all year. Someone without a spouse claims both amounts; in a couple, the spouse with the higher net income claims the home amount.[3]

What it does not do

The travel part of the deduction is not modelled: it needs each trip and any travel benefit from an employer. The far north of six provinces and Labrador are northern zones too, but a plan only knows its province, so it takes no deduction there.

See also

  • Income tax in Nunavut · Nunavut taxes income in four brackets from 4% to 11.5%, refunds a cost of living credit and charges employees a payroll tax.
  • Income tax in the Northwest Territories · The Northwest Territories tax income in four brackets from 5.9% to 14.05%, refund a cost of living credit and charge employees a payroll tax.
  • Income tax in Yukon · Yukon taxes income in five brackets from 6.4% to 15% and gives the federal credit amounts at its lowest rate.

References

  1. ↑Income Tax Regulations s.7303.1(1): "An area is a prescribed northern zone for a taxation year for the purposes of section 110.7 of the Act where it is (a) the Yukon Territory, the Northwest Territories or Nunavut" · The three territories are a prescribed northern zone in full: every resident qualifies for the northern residents deduction · effective 1999-04-01
  2. ↑ITA s.110.7(1)(b): "the lesser of (i) 20% of the taxpayer's income for the year, and (ii) … the specified percentage … by the total of (A) $11.00 multiplied by the number of days in the year included in the qualifying period in which the taxpayer resided in the particular area, and (B) $11.00 multiplied by the number of days … throughout which the taxpayer maintained and resided in a self-contained domestic establishment in the particular area (except any day included in computing a deduction claimed under this paragraph by another person who resided on that day in the establishment)"; s.110.7(2)(a): the specified percentage for a prescribed northern zone is 100% · Northern residents deduction (line 25500): $11 a day lived in a northern zone, and $11 more a day for maintaining and living in a home there (one claim a home), up to 20% of net income; deducted from taxable income · See the source · effective 2016-01-01
  3. ↑Our convention under ITA s.110.7(1)(b)(ii)(B) ("except any day included in computing a deduction claimed under this paragraph by another person who resided on that day in the establishment"): one claim of the home amount a household, given to the higher-income spouse (ties: the earlier plan person), the same side as the spouse amount · In a territory every adult in the plan lives there all year; a person alone claims both $11 amounts, and in a couple the spouse with the higher net income claims the home's $11 · effective 2026-10-04