Amount that you have entered as your employment benefits (shown below) for your Northern Residence deduction is greater than the amount reported on your T4 or T4A slip

Katie and John moved from Vancouver, British Columbia to their new house in Yellowknife, Northwest Territories on March 15, 2019. Yellowknife is listed as a prescribed northern zone (Zone A).

Katie started working at Smith Co. in Yellowknife and received a travel allowance from Smith Co. of $5,000 in 2019. The $5,000 travel allowance is included in box 32 of Katie’s 2019 T4 slip from Smith Co.

On November 1, 2019, Katie flew back to Vancouver, British Columbia to visit her mother and spent $1,500 on travel expenses. Katie took one trip in 2019. The lowest return airfare available at the time of the trip was $400.

The first step is to determine whether Katie’s travel expense qualifies for the deduction for travel benefits. It appears that all 3 conditions are met:

1. Katie lives in a prescribed northern zone for at least 6 consecutive months.
2. Katie and Smith Co. are not related.
3. The $5,000 allowance received from Smith Co. is included in Katie’s income.

The second step is to calculate the amount Katie can claim as a deduction for travel benefits. Katie will complete Step 3 of Form T2222, Northern Residents Deductions. She will include her name as the person who took the trip in “Column 1” and the purpose of her trip (family reasons) in “Column 2”.

The amount of the deduction for travel benefits is calculated as the lowest of the following 3 amounts:

1. The value of the allowance received from Smith Co. : $5,000 (Column 3).
2. The actual amount of Katie’s trip: $1,500 (Column 4).
3. The lowest return airfare available at the time of Katie’s trip between the Yellowknife airport and the nearest designated city to that airport which is Edmonton: $400 (Column 5).

As Yellowknife, Northwest Territories is located in a prescribed northern zone, Katie will enter $400 under the “Zone A” Column in Step 3.