Trips Made by a Resident of a Designated Remote Area
Trips you pay for on behalf of an employee (or an eligible family member) who works and resides in a designated remote area constitute a taxable benefit for the employee.
The value of the travel benefit corresponds to the travel expenses incurred for trips made by an employee or an eligible family member:
- to receive medical services not available where the employee lives (including the travel expenses of a person accompanying the person requiring medical care); or
- for non-business or non-medical reasons (for example, trips made because of a death or an unfortunate event, or annual leave).
Travel expenses include the cost of plane, train or bus tickets, expenses related to the use of a vehicle, the cost of meals and lodging, and incidental expenses such as taxi fares, tolls and ferry charges. You have to include the value of the travel benefit (including GST and QST) in boxes A, G, I and K of the employee's RL-1 slip (see courtesy translation RL-1-T).
In addition, if the trips were made to receive medical care, you have to enter “K-1” in a blank box of the RL-1 slip, followed by the value of the benefit for such trips.
You have to subtract an employee's allowable travel deduction from the employee's gross remuneration subject to income tax for a pay period if the employee's remuneration for the pay period includes the value of a taxable benefit related to trips made by a resident of a designated remote area and the following conditions are met:
- The employee has lived in a designated remote area for a period of at least six consecutive months that began or ended in the year.
- The trip was made by the employee or an eligible family member during the period of the year in which the employee lived and worked in the remote area.
- The employee worked in the remote area at the time the trip was made.
- You and the employee are dealing at arm's length.
- The trip was made by the employee or an eligible family member to receive medical care not available where they live (unlimited number of trips), or for a non-medical reason, such as a trip made because of a death or an unfortunate event, or an annual leave (limit of two trips for the employee and for each eligible family member).
- Neither the employee nor any eligible family member will claim, in their income tax return, another deduction or tax credit for medical expenses with respect to the taxable benefit.
- No form of financial assistance (other than this taxable benefit) was granted to the employee or an eligible family member for travel expenses. This condition does not apply if the financial assistance was included in the employee's or an eligible family member's income.
The travel deduction that you have to subtract from an employee's gross remuneration is the result of the following calculation:
- the least of:
- the value of the taxable benefit,
- the total travel expenses paid for the trips, and
- the cost of the lowest return airfare at the time of the trip between the place the employee lives (or the closest airport) and the nearest designated city;
- multiplied by one of the following percentages:
- 50%, if the remote area is located in an intermediate zone (see guide TP-350.1.G-V, Deduction for Residents of Designated Remote Areas),
- 100%, if the remote area is located in a northern zone (see guide TP-350.1.G-V).
If the trip is not made in the year in which the benefit is provided, do not subtract any amounts related to it from the employee's gross remuneration.
For more information about the travel deduction and for a list of the areas concerned, see guide TP-350.1.G-V or go to Residents of Remote Areas.