Keeping your transit costs down with a tax incentive
There are so many things that we take for granted when it comes to our personal expenses that we tend to not give them much thought. For example, it is well known that it costs money to go out and make a living everyday. The tax department realizes this and has made some attempts to give some tax incentives to help offset this working expense.
One of these is the transit incentive. You probably don’t pay much attention to this potential credit if you drive your vehicle to work. For those that take the public transit however, they know the cost involved with this and anything that helps to reduce it is well received.
In order to capitalize on this incentive you need to be the purchaser of a transit pass. For the cost of the transit it has to allow you to be able to travel whenever you want within Canada, using transportation such as your local bus, streetcars, subways, commuter trains and buses, as well as local ferries.
Some passes are what are called short duration passes and these must allow the unlimited travel for 5 days in a row, but you have to purchase an amount of these that will entitle you to at least 20 days of travel within a 28 day timeframe.
You may also have the opportunity to use electronic payment cards as your source of payment, but to be eligible for the tax credit you would have to use it for at least 32 one way trips where the use period was not interrupted for a period of 31 days, plus the public transit that is issuing the electronic card gives both a receipt for the cost and use of the card.
In some cases employers will pay for these passes as part of their incentives to their employee’s. This means you cannot claim this expense, and in fact you have to claim it as a taxable benefit.
While this is one source of relief that you may be able to take advantage of in regards to the costs you incur just to go to work everyday, there may be another credit that is available to you. This is the working income tax benefit (WITB). This is a refundable type benefit and has been designed to help those who are classed as being in the low income bracket yet are in the workforce.