Bill 196 2007

An Act to amend the Income Tax Act to provide for a tax credit for expenses incurred in using public transit

Note: This Act amends the Income Tax Act.  For the legislative history of the Act, see Public Statutes – Detailed Legislative History on www.e-Laws.gov.on.ca.

Preamble

Public transit is an important public good for Ontario which must be promoted.

By encouraging people to use public transit, many benefits result. For instance, harmful greenhouse gas emissions are reduced and traffic congestion and gridlock are eased because fewer motorists will be on our province's roads.

In order to encourage people to use public transit, it is important to give them incentives. One way to achieve this is to permit taxpayers to obtain a non-refundable income tax credit for expenses incurred for using public transit. The federal government implemented a federal income tax credit for public transit expenses incurred after June 30, 2006. It is appropriate for Ontario to offer a similar income tax credit at the provincial level.

Therefore, Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

   1.  (1)  Subsection 8 (10) of the Income Tax Act is amended by adding at the end "except no portion of the individual's public transit expense tax credit determined under section 8.4.6 for the taxation year shall form part of the amount paid under this subsection".

   (2)  Section 8 of the Act is amended by adding the following subsections:

Public transit expense tax credit

   (16.2)  An individual who is an eligible individual under section 8.4.6 for a taxation year ending after December 31, 2006 may deduct from the amount of tax otherwise payable under this Act for the taxation year an amount not exceeding the amount of the individual's public transit expense tax credit determined under that section for the taxation year.

Same, payer of expenses

   (16.3)  Subject to subsection (16.4), a taxpayer who pays eligible public transit expenses on behalf of an eligible individual under section 8.4.6 for a taxation year ending after December 31, 2006 may deduct from the amount of tax otherwise payable under this Act for the taxation year an amount not exceeding the amount of the payer's public transit expense tax credit determined under that section for the taxation year.

Exception, employer

   (16.4)  A person who employs or retains the services of an eligible individual under section 8.4.6 and who pays eligible public transit expenses of the individual for a taxation year ending after December 31, 2006 as part of the individual's remuneration is not entitled to make the deduction described in subsection (16.3).

   2.  The Act is amended by adding the following section:

Public transit expense tax credit

   8.4.6  (1)  In this section,

"eligible individual" means, in respect of a taxation year, an individual other than a trust who is resident in Ontario on the last day of the year and subject to tax under this Act throughout the year; ("particulier admissible")

"eligible public transit expenses" means the amount paid for a pass for personal transportation of an eligible individual on a regular passenger transportation service operated by, for or on behalf of the Government of Ontario, a municipality in Ontario or a transit commission or authority in Ontario, if the pass is for a duration of at least one week beginning after December 31, 2006. ("dépenses de transports en commun admissibles")

Amount of tax credit

   (2)  Subject to subsection (4), the amount of an eligible individual's public transit expense tax credit for a taxation year under subsection 8 (16.2) is 15.5 per cent of the eligible public transit expenses,

  (a)  that the individual incurs and pays in respect of the taxation year; or

  (b)  for which the individual receives payment as part of the individual's remuneration for the taxation year from an employer or other person who retains the services of the individual.

Same, for payer

   (3)  Subject to subsection (4), the amount of a payer's public transit expense tax credit for a taxation year under subsection 8 (16.3) is 15.5 per cent of the eligible public transit expenses of an eligible individual in respect of the taxation year and that the payer pays on behalf of the individual, except if the payer makes the payment as part of the individual's remuneration.

Receipts required

   (4)  No person may claim a tax credit under this section for the eligible public transit expenses of an eligible individual unless the person, when making the claim, files with the Minister receipts for the expenses that are issued by the provider of the transportation service to which the expenses relate and that comply with subsection (5).

Form of receipts

   (5)  The receipts shall indicate,

  (a)  the name of the eligible individual;

  (b)  the name of the provider of the transportation service;

   (c)  the amount paid for each pass for personal transportation to which the eligible public transit expenses relate;

  (d)  the duration of each pass described in clause (c); and

  (e)  the other information, if any, that the regulations prescribe.

Duty to provide receipts

   (6)  Upon receiving payment of eligible public transit expenses of an eligible individual, a provider of a transportation service to which the expenses relate shall, at the request of the person who pays the expenses and at no cost to the person, issue a receipt that complies with subsection (5) to the person.

Duty to forward receipts

   (7)  A person to whom a receipt is issued under subsection (6) shall forward it to the person who is entitled to claim a public transit expense tax credit specified in subsection (2) or (3), as applicable, if the second person is a different person.

Commencement

   3.  This Act comes into force on the day it receives Royal Assent.

Short title

   4.  The short title of this Act is the Income Tax Amendment Act (Public Transit Expense Tax Credit), 2007.

EXPLANATORY NOTE

The Bill amends the Income Tax Act to permit taxpayers to obtain a non-refundable income tax credit for expenses that they incur and pay for using public transit after December 31, 2006. If another person pays the expenses on behalf of the taxpayer, that other person is entitled to the tax credit, except if the person makes the payment as part of the taxpayer's remuneration.