"... The lowest return airfare is an annual conundrum ... Andy Wong. FCPA. FCGA, CFP is a tax accountant in Yellowknife.
The Canada Revenue Agency is finally taking this issue seriously. In a new report titled Servicing You Better, released this October, the CRA promised to "explore options that can help taxpayers identify the lowest return airfare".
Here is the back story if you are new to the territories. You qualify tor a travel deduction if you received a Box 32 travel benefit from your employer, and have lived in the Northern parts (Zone B or zone A) of Canada for at least six months when you file your tax return. The deduction allows you to claim the lowest of three amounts the Box 32 benefit, your trip expenses, or the lowest return airfare.
Your Box 32 benefit and trip expenses are no mystery to you. But. what is the lowest return airfare? The CRA says, "the lowest return airfare ordinarily available for regularly scheduled commercial flights, excluding promotions or discounts that are not ordinarily available, on the date that the travel began".
You can only get that airfare information if you ask at the airport, and get it in writing, at the start of your trip. This is totally impractical. Imagine a Paulatuk resident using multiple airlines just to leave the territories and you start to get the picture.
We have been jury rigging the travel deduction by using an annual estimated average airfare provided by Northern airlines. But these amounts only cover 27 communities the airlines serve, of the 58 NWT and NU communities.
I commend the CRA's recent announcement to identify the lowest return airfare options by 2019. But two years is a long time to wait for a solution to this pressing problem.
There is a current reliable option. I suggest the CRA consider the federal government's vacation travel assistance (VTA) entitlement (Google 'vacation travel assistance 2017') as a lowest return airfare alternative.
All federal government employees living in the 266 isolated communities throughout Canada receive the VTA - the Box 32 travel benefit. The VTA is updated semi-annually and is intended to represent 80% of a certain economy fare, for a return flight from each community to the headquarters city.
Whether or not the VTA truly represents the lowest return airfare is irrelevant. That's because we have no idea what the lowest return airfare is. The VTA is a sound option because of its nation-wide application, reliability and. importantly, the airfare values. For example. Yellowknife's VTA is $703.50 for 2017, a low but plausible alternative. Inuvik. Iqaluit and Baker Lake are $2,923. $3,209 and $4,676 respectively. Each is a plausible alternative for those communities.
Can the CRA ignore the law and allow the VTA as an alternative lowest return airfare? Certainly. The CRA introduced the optional simplified method that allowed a fixed $I7 per meal, and fixed per-kilometre cost for driving trips, without receipts, for the travel deduction You can opt out and claim your higher receipted meals and vehicle costs. Similarly, the VTA can be adopted as the lowest return airfare floor amounts. You would also have the right to claim a higher lowest return airfare with proper documentation.
Can the VTA end our annual tax-time conniption? It certainly will for taxpayers living in 266 communities throughout Northern Canada...."
Opinion NORTHERN NEWS SERVICES MONDAY, December 18.2017 page A11 http://NNSL.com
The Canada Revenue Agency is finally taking this issue seriously. In a new report titled Servicing You Better, released this October, the CRA promised to "explore options that can help taxpayers identify the lowest return airfare".
Here is the back story if you are new to the territories. You qualify tor a travel deduction if you received a Box 32 travel benefit from your employer, and have lived in the Northern parts (Zone B or zone A) of Canada for at least six months when you file your tax return. The deduction allows you to claim the lowest of three amounts the Box 32 benefit, your trip expenses, or the lowest return airfare.
Your Box 32 benefit and trip expenses are no mystery to you. But. what is the lowest return airfare? The CRA says, "the lowest return airfare ordinarily available for regularly scheduled commercial flights, excluding promotions or discounts that are not ordinarily available, on the date that the travel began".
You can only get that airfare information if you ask at the airport, and get it in writing, at the start of your trip. This is totally impractical. Imagine a Paulatuk resident using multiple airlines just to leave the territories and you start to get the picture.
We have been jury rigging the travel deduction by using an annual estimated average airfare provided by Northern airlines. But these amounts only cover 27 communities the airlines serve, of the 58 NWT and NU communities.
I commend the CRA's recent announcement to identify the lowest return airfare options by 2019. But two years is a long time to wait for a solution to this pressing problem.
There is a current reliable option. I suggest the CRA consider the federal government's vacation travel assistance (VTA) entitlement (Google 'vacation travel assistance 2017') as a lowest return airfare alternative.
All federal government employees living in the 266 isolated communities throughout Canada receive the VTA - the Box 32 travel benefit. The VTA is updated semi-annually and is intended to represent 80% of a certain economy fare, for a return flight from each community to the headquarters city.
Whether or not the VTA truly represents the lowest return airfare is irrelevant. That's because we have no idea what the lowest return airfare is. The VTA is a sound option because of its nation-wide application, reliability and. importantly, the airfare values. For example. Yellowknife's VTA is $703.50 for 2017, a low but plausible alternative. Inuvik. Iqaluit and Baker Lake are $2,923. $3,209 and $4,676 respectively. Each is a plausible alternative for those communities.
Can the CRA ignore the law and allow the VTA as an alternative lowest return airfare? Certainly. The CRA introduced the optional simplified method that allowed a fixed $I7 per meal, and fixed per-kilometre cost for driving trips, without receipts, for the travel deduction You can opt out and claim your higher receipted meals and vehicle costs. Similarly, the VTA can be adopted as the lowest return airfare floor amounts. You would also have the right to claim a higher lowest return airfare with proper documentation.
Can the VTA end our annual tax-time conniption? It certainly will for taxpayers living in 266 communities throughout Northern Canada...."
Opinion NORTHERN NEWS SERVICES MONDAY, December 18.2017 page A11 http://NNSL.com
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