With many Northerners forced to plan “staycations,” or vacations close to home, next year should be a little unusual when it comes to filing personal income taxes.
Each member of a household can claim up to two trips per member of the household on a northern resident deduction, provided you have the Box 32 travel document information for your T4 slip.
Andy Wong, a longtime tax consultant in Yellowknife, said the main thing to remember when filing next year is that, from a tax perspective, there’s no difference between a staycation trip and a vacation in Mexico.
“You can claim expenses for a trip, but a trip is not directionally defined — not north, south, east or west. There is also no distance attached.
“This is totally obscure because a lot of us think that you have to fly somewhere for it to qualify as a deduction.”
While camping trips and boating trips are common in the North, residents may not be accustomed to claiming any portion of them on taxes.
“I think from a tax filing situation there will be more challenges next year in dealing with clients just because the simplest trips (to file) are with the use of airline itineraries,” said Wong. “Anything else requires a lot of digging around or back and forth between the tax agent and the client, and they might not have all of their information fully supported.”
For this reason, it’s a good idea to keep on hand a record of expenses for things like meals, travel, insurance, fuel, repairs or depreciation costs, photographs of your final destination and any other supportive documentation to prove the trip you’re taking.
Wong said “a trip” could mean a one week camping trip to Fred Henne Territorial Park. With a family of four and six nights of camping, this would equal 51 meals for four people for six days. This is on top of camping fees and travelling several kilometres for the destination.
David Lucas, general manager of H&R Block Yellowknife, agrees.
“I have claimed it on my own tax receipt after we went to Fred Henne in the past,” he said. “We kept track of expenses for camping and had it audited and it worked out fine. It is important to keep gas receipts detailed when you are going out and how much mileage when you are driving back and forth.
“A lot of people think you have to fly to Edmonton to claim the trips.”
Boating and snow machine trips
In other trip situations, it may get much more complicated, particularly if people are travelling by boat or by snowmobile.
“If a family had taken one snowmobile out for two weeks on the land, the family could claim the meals plus the costs of operating the snow machine,” Wong said. “I don’t just mean the gas. I mean the repairs incurred, the depreciation on the vehicle, which could be substantial. The fact is every snow machine when you pull it out every year you have to fix something.”
The situation would be similar with a boat, which is applicable to many northern residents who live near a river or close to a lake, Wong added.
“If you have a family of four and are out on lake for two weeks and that is the only time you used a boat, you can claim the operating costs for the entire year because that would be the only use for it,” he explained.
Lucas agreed that while this is possible, it would be a highly complicated endeavour if people used the vessel for other travel as well. Based on his experience with clients, most people wouldn’t keep the required level of detailed records for filing because it would mean they would have to verify how that particular vehicle was being used for that one particular trip.
“To claim vehicle expenses like maintenance you have to detail all maintenance for the entire year and then you have to detail in a log how many kilometres you have used the vehicle for personal use versus that trip,” he explained. “Then you prorate expenses to that amount.
“Most people never keep that level of detail logged and if they try to claim it, they are usually disallowed.”
Wong said photographs of a destination are helpful in having documentary evidence of travel.
“I think the important thing when people go on a trip and want to file a tax claim, it is good to have a photograph of the destination,” he said. “So if you’re going on a lake or an island, it might be hard to prove the destination but if you have a photograph you have some proof.
“I think the Canada Revenue Agency is trying to make (filing taxes) work and so you just have to give them something credible.”
Lucas said that he’s less inclined to think that photographs can be of a lot of use in this way, however, he thinks it’s a good idea to take photos of receipts for backup.
“I recommend that if there are problems of keeping track of receipts when travelling, just taking photos of receipts can help because it will show the location and time of where you are and the things you’ve purchased,” he said.