About the Tax Credit for Public Transit Passes

Find out more about the federal income tax credit for monthly transit passes and how the Government of Canada is encouraging the use of mass transit to reduce air pollution and greenhouse gas emissions.

What is the tax credit for public transit passes?

On July 1, 2006, the Government of Canada began its program to offer individual Canadians a non-refundable tax credit to help cover the cost of monthly or longer duration public transit passes. Because it is a non-refundable tax credit, anyone who applies does not receive the money in the form of a refund. Instead, the amount claimed is multiplied by the lowest personal income tax rate for the year (15.25% in 2006) and then is deducted from the amount of tax owed for that year. Visit the Canada Revenue Agency website for additional information about how to qualify and claim the transit pass tax credit.

What does the transit pass program mean for me?

If your monthly transit pass costs $100, your tax credit in 2006 would be $91.50 (six months multiplied by 15.25%). Remember, the transit pass program commenced as of July 1, so only six months of transit passes will be calculated for the credit in 2006. In 2007, when the lowest marginal tax rate will increase to 15.50% and the tax credit for public transit passes can be applied to the whole year, the credit could reduce your taxes by as much as $186.

You will be eligible to claim the tax credit for public transit passes on your 2006 income tax return for the amounts you have paid for travel that occurs after June 30, 2006, but you must have proof of purchase. At a minimum you need to keep your expired monthly transit passes for months after June 2006 to support your claim. Visit the Canada Revenue Agency website for additional information about how to qualify and claim the tax credit for your transit pass.

Who's managing this transit pass program?

The tax credit for monthly transit passes is being administered by the Canada Revenue Agency. If you would like more information on how to claim your tax credit, visit the Canada Revenue Agency website.

Why is the government giving a tax credit for transit passes?

Canadians are concerned about traffic congestion and the harmful greenhouse gas emissions that come with it. Increasing the use of public transit, including buses, subways, commuter trains and ferries, will help ease traffic congestion in our urban areas and reduce air pollution that dirties our air and affects our health. The tax credit for public transit passes will make public transit more affordable for Canadians and provide clean air in our communities.

The Government of Canada is also providing an unprecedented level of funding to help improve and expand public transit systems. Budget 2006 dedicated $1.3 billion to public transit capital improvements, through the Public Transit Fund and the Public Transit Capital Trust. The Budget also maintained federal commitments of over $1.5 billion to major public transit projects across Canada, including improvements to the Toronto Transit Commission, the new Canada Line in Vancouver, GO Transit in the Greater Toronto Area, and the Montréal Métro. The Gas Tax Fund, which will provide $5 billion over five years, supports environmentally sustainable municipal infrastructure, including public transit projects such as the Edmonton light rail transit. As well, funding for public transit is an eligible category under the Municipal Rural Infrastructure Fund. For more information, visit www.infrastructure.gc.ca.

Encouraging greater use of public transit is one element of the Government of Canada's environmental agenda to reduce greenhouse gas emissions and promote clean air.