What is Northern Residents Deductions?

The Canadian government in an effort to improve the population of its sparsely populated northern territories which is primarily due to the isolation and extreme weather conditions there, has offered financial incentives to people who live there or have lived there for at least six consecutive months. As the people living there face challenges not only because of the weather, but also due to long distances necessarily traveled to procure even basic provisions etc. due to scattered communities and markets. So the government offers them tax relief and assistance in leave travel and travel for medical treatment. Collectively these are called Northern Residents Deductions. The tax rebate amounts to $15 a day, apart from employer sponsored vacation subsidy and medical travel.


The territories lying north of 51' to 57' in the provinces of Manitoba, British Columbia, Alberta, Saskatchewan, Ontario and Quebec are generally considered to be part of the northern territories, where residents qualify for the northern residents deductions. The Intermediate Zone provides its residents with only 50% of the benefits that are available to residents of the northern territories. As the isolated territories have limited or no access to education, health care services, entertainment, etc. the government allows them a subsidy to enjoy these benefits that people in less isolated areas take for granted.

The benevolent federal government of Canada provides Territorial Formula Financing (TFF) to support its citizens in isolated communities and helps them enjoy the benefits that their southern counterparts enjoy. The long and bitterly cold winters and lack of farming and farm products create a dearth of fresh produce and poultry in the northern regions, which is partly addressed by the Northern Residents Deductions. However detractors feel that the federal government should not have to pay or subsidize the choices made by individuals, knowing fully well the hardships to be faced. Also there is a feeling among the taxpayers from the southern regions that their hard earned money is used to pay for unemployed lazy people who just live off government handouts by virtue of living in the isolated north.

Though detractors have argued that arbitrary benefits by reduced taxes and other subsidies only serve to promote discrimination amongst regions, the feeling has subsided with the introduction of Zone A and Zone B with their attendant NRD. The primary objective of the NRD is to entice skilled workers, especially doctors, teachers, lawyers and such professionally qualified people to live in the isolated northern territories by helping them in various ways to ease the burden of living in such harsh climes and severe isolation. Though the northern residents deductions managed to make the benefits provided by employers to retain skilled workers official, the extent to which it has been successful in luring or retaining those skilled and qualified professionals in the territories is yet to be determined. As the main sources of employment in the northern regions is seasonal like mining, forestry, tourism, etc apart from military establishments and administrative work, the NRD is here to stay, at least in the near future.