Haida Gwaii tax deduction still snagged by address problem

Months after Haida Gwaii residents began reporting problems claiming the full Northern Residents Deduction, the Village of Daajing Giids is again asking Ottawa to fix what may be a simple problem with how the islands are listed.

In an Aug. 31 letter to federal Finance Minister François-Philippe Champagne and the Department of Finance, the Village said it continues to hear from residents whose Northern Residents Deduction claims are being questioned or disallowed because of their addresses. Haida Gwaii is listed as a Zone A prescribed area, but the individual communities where residents actually receive their mail are not.

Haida Gwaii was restored from Zone B to Zone A for the 2025 tax year following years of advocacy. The change allows eligible residents to claim the full Northern Residents Deduction rather than the lower deduction available in Zone B. But problems began surfacing during this year's tax season as residents who had correctly claimed the increased deduction received review and reassessment notices from the Canada Revenue Agency.

Literacy Haida Gwaii, which operates a Community Volunteer Income Tax Program, raised the issue earlier this summer after hearing from numerous residents. Executive director Beng Leng Favreau said CRA staff contacted while helping affected taxpayers were themselves unaware that Haida Gwaii had moved to Zone A. Under the previous Zone B listing, individual communities including Daajing Giids, Sandspit, Skidegate, Tlell, Port Clements and Masset appeared by name. Under the new Zone A listing, only Haida Gwaii appeared.

Skeena-Bulkley Valley MP Ellis Ross took the issue to then-National Revenue Minister Champagne on June 30. Ross said his office had received multiple reports of residents being reassessed or selected for review after claiming the expanded deduction. Literacy Haida Gwaii reported similar cases involving returns prepared through both volunteer tax clinics and professional tax preparers.

In one case cited by Ross, a Haida Gwaii small business owner received a refund that was later challenged by the CRA and was asked to provide extensive documentation proving residency and medical travel. The resident repaid the disputed amount rather than risk penalties while the issue was reviewed.

The Village now believes the way Haida Gwaii appears in federal guidance may be contributing to the continuing problem. As its letter points out, Haida Gwaii is the name of the archipelago, not normally the community listed in a resident's mailing address.

The Village is asking the CRA to add Daajing Giids, Skidegate, Sandspit, Miller Creek, Lawn Hill, Tlell, Port Clements, Masset, Old Massett and Tow Hill to its list of Zone A communities alongside Haida Gwaii.

The letter describes the return to Zone A as a welcome change following years of advocacy, but says clearer federal guidance is needed to ensure eligible residents are not denied the deduction because their tax return lists Masset, Tlell or another Haida Gwaii community rather than simply “Haida Gwaii.”

The Aug. 31 letter is included in the agenda for Daajing Giids council's Sept. 9 meeting.