Military and Police Members Eligible for Tax Relief

If you have clients who are members of the Canadian Armed Forces (CAF), they may be eligible for a special tax credit. Here's what you need to know:

Where to Claim it. Look for Line 24400 – Canadian Armed Forces personnel and police deduction on the T1 return.

Who Qualifies? CAF members who are deployed outside of Canada and are considered to be in a high or moderate risk area can receive a tax deduction for the time spent during a deployment. This also applies to Canadian police officers who may be sent outside the country to perform training in some countries. In the past Canada has sent police officers to train local forces in Lebanon, the West Bank, Afghanistan and Haiti.

How much is the Deduction? First, it’s an easy claim. You’ll see the entitled amount on a T4 slip in Box 43. 

The Qualifiers. Effective 2017 and subsequent tax years, all CAF members and police officers may be eligible for the deduction for the period over which they are deployed on an international operational mission, regardless of the risk score associated with the mission. In addition, the maximum amount that an individual may deduct in a taxation year is equal to the highest level of pay earned by a Lieutenant-Colonel of the CAF.

Before 2017. What constitutes a high-risk area is determined by the Department of National Defence. There is a number score which DND uses and for those who fall into this range tax relief is automatically provided for the period of deployment. When it comes to those who are in moderate risk regions, that category falls, perhaps curiously, under the control of the Minister of Finance. Tax relief is applied for the period for which the mission is designated moderate risk. These same designations apply to police officers.

Where are our CAF Members Working? It isn’t widely reported how our CAF members are scattered around the globe and therefore how many Canadian taxpayers in the CAF can this deduction. For example, Operation Calumet sees CAF members as a part of an independent peace keeping mission in the Sinai Peninsula in Egypt. Canada has been a part of this mission since 1985.

Look up the Current Operations List here:

https://www.canada.ca/en/department-national-defence/services/operations/military-operations/current-operations/list.html

The Botton Line. If any of these members are on your client list, it’s important to familiarise yourself their tax filing scenarios and whether they have missed making a claim for deductions or credits they may qualify for. Remember you can go back 10 years to correct errors or omissions in most cases.