Canada Revenue Agency's new tool for simplifying travel deduction puzzles some Northerners

A new online tool meant to simplify the process of claiming the Northern Residents Travel Deduction is causing more confusion than confidence among some northerners. 

On Monday, the Canada Revenue Agency (CRA) announced an online tool listing the lowest return airfare (LRA) for more than 135 airports in prescribed northern zones. LRAs are required to claim the travel deduction at tax time.

However, the CRA's numbers don't seem to reflect the reality of northern flights, especially when compared with the LRA tables provided by some northern airlines.   

For the months of January to March 2022, the CRA tables list the LRA from Dawson City, Yukon, to Vancouver as $906.94. For 2021, Air North's own tables list that fare as $1331.23.

For the months of January to March 2022, CRA lists the LRA from Yellowknife to Edmonton as $923.21, while Canadian North lists that flight as $765.73.

"That first part of the year, the CRA figure is higher than Canadian North," says Kevin O'Reilly, the N.W.T. MLA for Frame Lake.

O'Reilly says he's been asking the CRA to do something like this for years because of the headache it causes northerners.

"But the CRA figures kind of drop dramatically in April until the end of 2022 and that kind of coincides with part of the time where Canadian North was the only airline flying directly between Yellowknife and Edmonton — so I don't know how CRA came up with these numbers." 

Nathalie Prieur, who represented the CRA at an online news conference on Tuesday, said the CRA arrived at its fares by working with a contracted travel service provider to determine the lowest level of economy fares available. 

"We are aware that airfare amounts fluctuate regularly and the lowest price option available may be at times less or more expensive than the amounts reflected in the table," she said.

"Northern residents will still be able to determine the LRA themselves if preferred, as [long as] they can provide the supporting receipts or documents." 

Virginia Labelle is a retired chartered accountant based in Whitehorse. She says the CRA had a great idea in providing the online listings, but there's a missing link.

In the past, when doing taxes for Yukoners, she says she's relied on the LRAs Air North publishes.

"This is a little more organized and official and it's adjusted seasonally," says Labelle. "Except what they're looking at is the lowest level of economy fares that are ordinarily available."

She says the CRAs policy states the lowest level of airfare that's ordinarily available on the date that the travel began, which means the amount you would pay if you booked and flew same-day. 

That amount is higher than the numbers the CRA tables list in most cases. 

The CRA says the online tool is a pilot project and that feedback will be considered if adjustments need to be made. The CRA did not provide information about how residents can provide feedback.