Public Transit Tax Credit
Budget 2017 proposes to eliminate the non-refundable public transit credit for amounts paid for eligible transit passes (including eligible electronic payment cards) for the use of public transit services after June 2017.
1. What is the public transit tax credit?
Currently, a 15% non-refundable tax credit is available to an individual in respect of the cost of eligible transit passes which include annual and monthly passes, as well as weekly passes and electronic fare cards used on an ongoing basis. An individual may also claim the cost of eligible public transit passes for the use of the transit services by the individual’s spouse or common-law partner or their child who is under the age of 19 at the end of the taxation year.
2. How is the public transit tax credit changing?
Budget 2017 proposes to eliminate the public transit tax credit for amounts paid for eligible transit passes that are for the use of public transit services after June 2017.
3. Can I claim a tax credit for amounts that I paid for the period January to June 2017?
Yes, you may be able to claim a 15% non-refundable tax credit for the cost of eligible transit passes that are for the use of public transit services for the period January 1, 2017 to June 30, 2017 on your 2017 income tax and benefit return.
4. If I have already paid for my annual transit pass for the period January to December 2017, will I be eligible to claim a tax credit for the full amount that I paid before July 1, 2017?
No. Even if you paid an amount before July 1, 2017, you can claim on your 2017 income tax and benefit return, only the cost pertaining to the portion that is for transit services for the period January 1 to June 30, 2017. In the case that you paid for a public transit pass which is valid after June 30, 2017, such as an annual pass, you will have to prorate your cost to determine the amount paid that is for the period January 1 to June 30, 2017.
For example, Robert purchased an annual transit pass for himself for 2017 for $700 and his spouse purchases monthly passes every month that cost $80 per month. His spouse purchases her pass a week before the start of a month. They have decided that Robert will claim the transit pass credit for all of their eligible transit pass expenses. Also, neither of their employers reimburse them for the cost of their transit passes.
Robert will calculate his transit pass credit for 2017 as follows:
January 1 to June 30 is 6 months and Robert’s annual pass is valid for transit services for all 12 months of the year.
Eligible portion of the amount paid for Robert’s annual pass:
$700 x 6/12 = $350
Eligible portion of the amount paid by his spouse for her monthly passes:
$80 per month x 6 months = $480
Note: Robert cannot include the cost of the transit pass his spouse purchased in June that is for transit services in July.
Total eligible expenses:
$480 +$350 = $830
Robert will enter $830 on line 364 of Schedule 1 as his public transit pass amount. The value of Robert’s public transit tax credit will be $830 x 15% = $124.50 for 2017. Since the public transit tax credit is a non-refundable credit, it is used to reduce tax owing, but any excess is not refunded.
5. Where can I get more information on the proposed changes to the transit tax credit?
The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its webpages often. All new forms, policies, and guidelines will be posted as they become available.
In the meantime, please consult the Department of Finance Budget 2017 documents for details.
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