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Tax Cuts and the Metropass

Today, Ottawa unveiled a expected tax credit for people who buy monthly or annual passes.  Although this will not put more money in the pockets of transit agencies, it will substantally change the break-even point for people who buy passes.

Without the tax credit, a monthly pass costs $99.75, equivalent to 47.5 fares.

On the Monthly Discount Plan, a pass costs $91.50 per month, equivalent to 43.6 fares.

The new tax deduction, at 15.25% reduces these multiples to about 40 and 37 respectively.  This is an important psychological breakthrough when the cost of using a pass falls below the perceived cost of a regular, daily commute.

The TTC needs to proceed on two fronts:

First, a revamped Metropass Discount Program campaign to swing even more riders over to the pass market which has already seen the benefit of a transferrable pass.

Second, a thorough review of service implications especially in the off peak.  We can reasonably expect that most of the marginal growth through shifting riders to passes is in trips they might not have taken otherwise and to pass sharing.

The City of Toronto has to get serious about funding growth in transit services in any time period where vehicles are available to do so.

5 thoughts on “Tax Cuts and the Metropass”

  1. How will you have to prove your spending on transit passes when you complete your tax return in order to get the credit? Will I now have to get a receipt every month that I buy a pass?

    Steve:  We don’t know yet.  Presumably, transit systems will issue receipts of some form.  This is fairly easy for folks like me who subscribe to the monthly pass, but for casual buyers, I don’t know.  We shall see.

    Meanwhile, I think Howard Moscoe’s proposal — that the feds just give transit systems a grant equal to 15 percent of the fare revenue in return for an immediate fare cut — will go nowhere fast.  The Tories have a fetish for implementing policy via the tax system rather than by direct funding.  This ensures that benefits flow disproportionately to the well-off.

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  2. I’ve been getting receipts for my metropass purchase for the last 5 years.  I just ask the fare collector for it when I make my purchase.  My work pays for half the cost of the metropass.

    I know I should probably subscribe, but since I wasn’t sure about the receipts I haven’t.

    Steve:  If the pass is on subscription, you will have bank statements although you probably don’t want to hand them in as “receipts”.  TTC needs to clarify how it will handle this situation both for subscribers and for “pay as you go” pass buyers. 

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  3. I read the budget document because I was wondering if July passes purchased in June (most people buy before the 1st of the month, right?) were eligible.  They are.  It is for transit in July.

    It also answered the question of receipts. You don’t require a receipt, the actual pass will do.

    Steve:  Arghhhh!  Does this mean that people like me who have every pass (except for one I lost) going back to May 1980 must forego our tax deduction to preserve our collections?  Of course, if we eFile, then we only have to keep them for purposes of tax audits.  Hmmm … a new rationale for collecting fare media.

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  4. Hi

    I take the GO train and buy weekly passes.  I do get a receipt everytime I buy the pass.  Is this eligible for tax credit?

    Steve:  Only monthly (or longer) passes are eligible.  The Canada Revenue Agency website has the following information:

    1. What is the tax credit for public transit passes?

    The tax credit for public transit passes is a non-refundable tax credit for the cost of buying a monthly (or longer duration) pass for commuting on buses, streetcars, subways, commuter trains and local ferries.

    See http://www.cra-arc.gc.ca/whatsnew/items/transit-e.html.

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  5. Hi,

    I’m wondering if I am a sole proprietor, what percentage of the GO and transit pass can I write off as an expense when doing my taxes? I need to take both and buy monthly passes.

    Thanks.

    Steve: I’m no tax guru, and I will leave this to others who comment on this site, but I suspect that it depends on the purpose for which you purchase the transit fares. By analogy to a car that is used for business and personal travel, you would need to establish what portion of the total use was for business. However, having done that, I am not sure how you would claim the personal tax credit for the remainder. The situation does not arise with cars because there is no deduction related to the personal portion of their use.

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