The 2006 federal budget introduced a new non-refundable public transit tax credit available to Canadians for the cost of public transportation passes. If you use public transportation such as busses, streetcars, subways, commuter trains or ferry’s and purchase a monthly or weekly passes, you are able to claim these costs as a tax credit on your income tax return.
Federally, the tax credit is 15% of the cost of transit pass and can be used to reduce your tax payable.
User Pay School Bus Programs
The CRA was asked to comment on whether the cost of transportation of students on a school bus under a user-pay school bus program would qualify for the public transit tax credit.
In a less than decisive opinion, the CRA indicated that such programs would probably not qualify.
The deciding factor is the definition of public transit under the Income Tax Act. Under the act, public transit is defined as
services offered to the general public, ordinarily for a period of at least five days per week, of transporting individuals, from a place in Canada to another place in Canada, by means of bus, ferry, subway, train or tram, and in respect of which it can reasonably be expected that those individuals would return daily to the place of their departure
At issue was the definition of the phrase general public. The CRA concluded that since access to school buses was limited to a particular group, school bus programs would not qualify for the public transit tax credit.
If your children use the public transit system to commute to and from school (as opposed to a user pay school bus), the cost of the transit passes would qualify for the tax credit. Additionally, you permitted to claim all public transit pass costs for yourself, your spouse, and your children under 18 on a single tax return.