Public transit tax credit
Video length: 3 minutes, 40 seconds
Meet Felicia. Felicia is happy, because she's decided not to drive to work this year. By taking public transit, she will save money on gas and insurance and won't have to deal with traffic congestion. And now the Government of Canada is helping her save on her taxes.
Felicia heard that there's a “Public Transit Tax Credit” she can claim on her tax return. So how does it work?
The Public Transit Tax Credit is a non-refundable credit that you can claim if you bought qualifying passes for public transit. For 2012, Felicia's credit is 15%, the lowest personal income tax rate, times the amount she claims.
A non-refundable tax credit reduces the federal income tax that Felicia has to pay.
However, if the total of her non-refundable tax credits is more than her federal income tax payable, Felicia won't receive a refund for the difference.
Felicia can claim the cost of public transit passes, even for multiple transit systems.
Felicia rode public transportation a lot this year. She bought passes for:
- Local buses, streetcars and subways
- Commuter trains and buses
- And ferries too!
Felicia also bought transit passes when she was travelling in Asia and the United States—but only Canadian passes count for the credit.
But Felicia bought all kinds of public transit passes. Which kinds are eligible?
The passes must be for unlimited travel. So one-way and return tickets, by themselves, don't count.
Yearly passes and monthly passes are eligible.
Shorter duration passes count too, if they gave Felicia unlimited travel for at least 5 days, AND if she purchased enough to travel for at least 20 days in any 28 day period.
Felicia's electronic payment cards are eligible too, if she used the same card to make at least 32 one-way trips in not more than 31 consecutive days.
The card must be from a public transit authority that provides a receipt for the cost and usage of the card.
Michel is Felicia's common-law partner and he likes to save by taking the bus too.
Felicia is extra happy, because she can claim both her and Michel's passes.
Felicia can also claim any passes for her or Michel's children who were under 19 on December 31, 2012.
So how will Felicia save all this tax money? For 2012, Felicia's credit is 15%, the lowest personal income tax rate, times the amount she claims. Felicia has gathered together all the documentation and determined that they've paid $700 for all the eligible public transit passes. This means that they will get a credit of $105.
To make her claim, Felicia needs to find:
- the passes,
- or the receipts for the passes,
- or a letter from her employer if her employer participates in a transit pass program.
Felicia has all her passes, and she just needs to make sure the pass displays:
- an indication that it is monthly or longer
- the date or period it was for
- the name of the transit authority or organization
- the amount paid
- and the identity of the rider by name or unique identifier.
If the passes don't show all of this information, cancelled cheques or credit card statements, along with the passes will be accepted.
If she can't find the receipts or the passes, bank statements that display the purpose of the debit are ok too.
Fortunately, Felicia doesn't need to send in her passes, cards and receipts when she files her income tax return —but she does need to keep them in case the CRA needs to see them.
To get her credit, Felicia should add up all the amounts, and fill in Line 364 on her income tax return with the total.
But she should remember to only claim the portion of the passes that she paid! And when she files her taxes this year, Felicia may save money—on top of all the savings she’s already banked by riding transit! Felicia is so happy she might buy a game system to use while she's riding the bus.
Want to save like Felicia? Here’s a link to help you claim you claim the Public Transit Tax Credit.
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