Budget Proposes Changes to Transit Tax Credits

The following text is taken from the budget announcement.  You will have to scroll down to find this heading because the page is not indexed.

Public Transit Tax Credit

Budget 2006 proposed a non-refundable public transit tax credit for the cost of monthly public transit passes starting July 1, 2006. Budget 2007 proposes to strengthen this measure on two fronts.

Electronic Payment Cards

Since the introduction of this credit, several transit authorities have developed proposals for the introduction of cost-per-trip electronic payment cards. The requirements for the existing credit do not accommodate these proposed cards.

Budget 2007 proposes to extend the eligibility for the public transit tax credit to accommodate these electronic payment cards. Under this proposal, the cost of an electronic payment card will be eligible for the credit if:

  • the cost relates to the use of public transit for at least 32 one-way trips during an uninterrupted period not exceeding 31 days, and
  • that transit usage, and cost of those trips, are recorded and receipted to the purchaser by the relevant transit authority, in sufficient detail as to allow the Canada Revenue Agency to verify eligibility for the credit.

A one-way trip will consist of an uninterrupted trip between the place of origin of the trip and the destination.

This measure will apply to electronic payment cards issued after 2006.

Weekly Passes

There may be instances where low-income individuals are unable to afford the financial outlay associated with purchasing a monthly pass. Even though they are regular transit riders, they may purchase a series of weekly passes.

Budget 2007 proposes to extend eligibility for the public transit tax credit to accommodate weekly passes where an individual purchases at least four consecutive weekly passes. For the purposes of this measure, weekly passes will include passes that provide a passholder the right to unlimited public transit use within a period of between 5 and 7 days.

Individuals making claims will be required to retain their receipts or passes for verification purposes.

This measure will apply to weekly passes valid for use after 2006.

I am not quite sure how the first measure will actually be implemented because the most likely way a Smart Card will work will be to operate as a limited-time pass.  In effect, you get to ride for some period of time within some bounded area.  This is necessary because the computing and monitoring required to figure out when one “trip” ends and another “begins” is quite daunting in a free-transfer system like the TTC.  Such a capability would significantly increase costs and raise concerns about trip monitoring as an invasion of privacy.

Making Weekly Passes part of this scheme is a welcome and overdue addition.  Now, can we look forward to multiple-trip fare media such as GO’s 10-trip tickets?

8 thoughts on “Budget Proposes Changes to Transit Tax Credits

  1. Re: Smart Cards: Aren’t various GTA transit systems supposed to introduce a smart card some time in 2008? Personally, I think it’s a great idea, and about time too. We’re years behind places like Hong Kong (where the Octopus Card can also be used for public parking)and New York (uses heavy bond paper with a magnetic strip for their Metro Cards. When you run out of money on the debit card, all you need to do is refill it at one of the machines found all over subway stations.)

    Steve: There will be some introduction of Smart Cards later this year by GO and some connecting systems, but the underlying technology will be very rudimentary. Nothing as sophisticated as systems in use elsewhere. As for the TTC, their question is who will pay the roughly $150-million cost of converting the system, and who will pay the roughly $20-million cost of annual maintenance. They are working on a detailed report to come out this summer. That’s a lot of buses and a lot of service that we won’t have just so that Queen’s Park can show it’s “doing something” about cross-border commuting. Maybe putting more money into GO Transit might be a better place to start.


  2. Current systems, such as Oyster, already keep track of all your movements. You can already view all the trips you took during a certain period of time. So all you’d have to do is print this out. Presumably any future system would have the capability to do this, as systems that have been place for some time already do. If one is concerned about privacy, one doesn’t have to claim the tax credit! The paperwork seems a bit detailed though.

    Hmm, the consecutive weekly pass thing is interesting. Given that they are transferrable, and don’t contain any identification, the federal government just created an instant market for used weekly passes. They are now worth $4.65 each – if you have four in a row. So start collecting your friends expired weekly passes now! If you get streak of 4, it’s $18.60! I wonder if people will be selling them on E-bay!


  3. They seem very insistent on giving tax credits to regular riders only (4 consecutive weeks, 32 trips in 31 days, etc.), so a credit for GO 10-trip tickets you can use any time probably isn’t coming soon — or would require you to claim them in sets of three used within a month. At some point the record-keeping might start to cost more than the tax credit…

    It’s a disappointment, though, that this seems to be the only new transit funding announced today. Canadian transit systems aren’t having trouble attracting riders, they’re having trouble carrying them all. If the goal is to increase transit use, seems like the tax credit money would be better spent on system improvements.


  4. I believe that the consecutive issue of attempting to turn weekly and multi-fare cards into effective monthly passes is rather pedantic (or would anal be a better term?).

    The tax credit should be purely to encourage the use of public transit. Granted, keeping track of individual fares can be overwhelming, but providing the credit for multi-rides or passes of any duration should be allowed without the “looks like a month” restriction.

    One of the things that is done right in the USA when it comes to transit is the way that this sort of credit works, albiet only for monthly passes… a person can purchase their pass through their employer with pre-tax income, so the income tax deducted from their paycheques is based on their income after the pass is purchased. This gives them the tax credit up front instead of waiting until the following spring.

    Of course, it would not eliminate the need for making the claim on one’s tax return for situations where this could not be implemented (some employers wouldn’t want to bother), but it could easily be extended to the purchase of weekly passes and multi-ride fares if the “looks like a monthly pass” restriction were removed. Then again, there are probably too many people who would not want to give up something that increases their annual tax refund in exchange for receiving the refund up front throughout the year.


  5. The tax credit ought to be replaced by a per-fare subsidy so that low-income individuals who don’t pay taxes, and possibly occasional riders, can benefit from reduced fares.


  6. Adding the weekly pass to be added up to a month looks good to me. I pay 53 dollars a week for 10 rides AJax to Finch GO bus zone – no matter when I take those rides.

    I get paid by the week I buy passes by the week.

    This will help those at the lower end.

    There could better ways to do this but I am not an accountant.


  7. I think they are on the right track with the weekly passes. Where I think the system is lacking is with respect to people who use mulitple transit systems on a weekly basis.

    I work out of two offices, therefore I use Go Transit 3 days a week and TTC 2 days a week. I spend $157 / month on transit and I can’t claim a cent of it because I don’t get a “Monthly Pass”

    When I lived in London (England), the transit system was integrated so that I paid for the distance I travelled and had 1 card to do it all.

    People like me fall through the cracks with this tax credit!


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