Here are the numbers you have been waiting for - the 2017 lowest return airfares or the last-minute airfare, at the time of your trip. You need to claim these crucial numbers to claim your northern residents travel deduction correctly.
Here is the background. You qualify for a travel deduction if you received a Box 32 travel benefit from your employer, and have lived in the northern parts of Canada for at least six months at the time you file your tax return. The deduction allows you to claim the least of three amounts the Box 32 benefit, your trip expenses, or the Lowest Return Airfare.
Your Box 32 benefit and trip expenses are no mysteries. However, what is the Lowest Return Airfare?
The last-minute airfare has been, and still is, a mystery. it is simply not feasible for taxpayers to get a true last-minute fare because of the outdated travel deduction tax law. In a nutshell, the law defined the lowest return airfare as the airfare you would have paid at the time of the trip, or the last-minute fare.
The deduction was introduced in 1987 when a last-minute airfare was easily obtainable. That drastically changed in 2002 when a last-minute fare fluctuate because it depended on available unsold seats. From that point on, a last-minute fare became a mystery.
It was not feasible to get the lowest return airfares or last-minute fare unless you stood in line to ask. In this information void, the CRA left it to taxpayers to figure it out. Two northern airlines calculated the average annual last-minute fare, some of which are reported below. The CRA has accepted these average annual amounts as acceptable alternative for the lowest return airfare (so far).
The 2017 average annual lowest return airfares or last-minute fares are;
YK - Edmonton, $1,042.32; Inuvik - Edmonton, $2,629.35; Cambridge Bay - Edmonton, $3,228.54; Kugluktuk -Edmonton, $2,700.68; Rankin - Winnipeg, $4,587.45; Iqaluit - Montreal/Ottawa, $2,620.40/$2,828.08; Hay River - Edmonton, $1,657.16; Norman Wells - Edmonton, $2,340.14; Ft. Simpson - Edmonton, $2,205.26; Resolute - Ottawa, $7,304.85; Pangnirtung - Ottawa, $3,590.90.
It is possible your trip’s last-minute, ‘‘lowest return airfare’ was higher than the amount above. For example, you might have travelled during a peak travelling period. It is unlikely any airline would be able, or willing, to provide you with a specific last-minute fare for a particular flight. The amounts above, in my opinion, are plausible last-minute average fares from the respective communities. The CRA will accept a higher amount if you produce a supporting letter from an airline, or you actually paid a higher fare.
You have a hard choice if your community is not listed above. For example, how would you find the 2017 ‘lowest return airfare’ from, say, Fort Smith, NT, or Arviat, NU? You can opt to use the federal government’s Vacation Travel Assistance (Google this) entitlement as an alternative. There is no certainty the CRA will accept the Vacation Travel Assistance amounts as the ‘lowest return airfare’ alternative although a reader informed me the CRA did accept his.