Seeking clarification of allowable deductions for Northern Residents travel.

[Jpenney74]

Hello,

I am hoping someone in the community can help me with something.  

• 2023 tax year
• On my T4 I have an amount indicated in Box 32 for travel in a prescribed zone.
• I do not have an amount indicated in box 33 for medical travel in a prescribed zone.
• I claimed 2 "other" trips for each family member.
• I claimed 3 medical trips for my wife.

CRA reviewed my return and deemed that the claim for medical trips was to be disallowed due to no amount indicated in Box 33.  I have previously claimed medical trips with no issue based on the amount that was included in Box 32.

Did the rules on deductions for Norther Residents change recently?  

[TurboTaxSusan]

No, you don’t need an amount in Box 33 on your T4. You can use a portion of the individual's $1,200 standard amount.

On the T2222 - Northern Residents Deductions form, Step B, Chart B uses the lowest of amount from column 3, 4, or 5 for each person/trip to determine the amounts used in the total. Column 3 needs to be either your travel benefit (box 33 if it’s for a medical trip), or the portion of the individual's $1,200 standard amount for the trip. So, if you don’t have anything in Box 33 on your T4, then you need to use a portion of your $1,200 standard amount. If you have already used up all of the $1,200 on other trips, then column 3 will be zero, which will be chosen for the total.

[Jpenney74]

Thanks for the reply.  Not quite sure that answers my question though.

I have an amount in Box 32 that exceeds the 1200 so I have never used that for making my claim.   I used a portion of the amount in box 32 when claiming for my personal trips and medical trips.

CRA reviewed my claim and disallowed the deductions for the medical trips. The personal trips were fine.

I was reviewed in 2016 and the method I have always used was acceptable.  But now they are saying that without an amount in box 33 I can't claim anything for medical travel. 

Did the rules for Northern Residents deductions change recently?

[TurboTaxSusan]

The $1,200 standard amount was added to Chart B, Column 3 in 2021, with small changes to the T2222 form being made since then. The form from 2020 specifically said "You can claim a deduction for medical travel if you have an amount in box 33 of your T4 slip or box 116 of your T4A slip showing any taxable travel benefits you received in the year." But what hasn't changed is that Chart B looks for the lowest amount in columns 3, 4 or 5. So, if Box 33 is zero, and you have used up the $1,200 standard amount on other trips, then column 3 is zero, and that's what's going to be used in the totals for Chart B. 

You can see the current (2023) T2222 and the previous versions of the form on the CRA website: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2222.html

[Jpenney74]

Thanks Again. Really do appreciate the follow up.

My understanding though is that I am not eligible to use the 1200 standard amount since I have a taxable travel benefit as indicated in box 32.  I don't believe I could use both.

So since the introduction of the standard amount in 2021 are we no longer able to allocate a portion of a taxable travel benefit to medical travel?

[TurboTaxSusan]

Yes, if you use the taxable travel benefit from box 32, you can't use the $1200 standard amount. You can choose to use the standard amount instead of the amount in box 32, but you can't use both.

Prior to 2021, Chart B on the T2222, specifically said that T4 slip – box 33 or T4A slip – box 116 should be used for medical travel. 

From 2021 onwards Chart B Column 3 has said “Enter either the taxable travel benefit or the portion of the individual’s $1,200 standard amount for the trip.”. It then refers you to Note 1 in the instructions, which says:

Payments from your employer for travel that was not for employment purposes are generally considered taxable benefits. Box 32 of your T4 slip or box 028 of your T4A slip shows the taxable travel benefits you received in the year. This includes the benefits received specifically for medical travel, which are shown in box 33 of your T4 slip or box 116 of your T4A slip. You can use the benefit for medical travel in the calculation in Step 3, Chart B – column 3 only if the medical services were for you or an eligible family member and were not available where you lived.

There is also this text on the CRA website (https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...:(

Payments from your employer for travel that was not for employment purposes are generally considered taxable benefits. Box 32 of your T4 slip or box 028 of your T4A slip shows the taxable travel benefits you received in the year. This includes the benefits received specifically for medical travel which are shown in box 33 of your T4 slip or box 116 of your T4A slip.

You can use the benefit for medical travel in the calculation in Step 3, Chart B – column 3 of Form T2222 only if the medical services were for you or an eligible family member and were not available where you lived.

So, while it’s not very clear on the current T2222 form, it does appear that you must use Box 33, and not Box 32 to claim the medical travel deduction (if you are not using the $1200 standard amount).

If you are not able to claim the medical trips on the Northern Residents Deductions form, you might still be able to claim the expenses as medical expenses: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4065/medical-expe...