Bill 42 2010

An Act to amend the Taxation Act, 2007 to provide for a tax credit for expenses incurred in using public transit

Note: This Act amends the Taxation Act, 2007.  For the legislative history of the Act, see the Table of Consolidated Public Statutes – Detailed Legislative History at 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.  Section 9 of the Taxation Act, 2007 is amended by adding the following subsection:

Public transit expense tax credit

   (23)  If an individual is entitled to a deduction under section 118.02 of the Federal Act for a taxation year ending after December 31, 2009, the individual is entitled to a tax credit for the year equal to the amount that would be determined in respect of the individual for the year under that section of the Federal Act if the references in that section to the appropriate percentage were read as references to the lowest tax rate.

   2.  The Act is amended by adding the following section before the heading "Division C - Corporations":

Public transit expense tax credit for payer

   89.1  (1)  Subject to subsection (2), a taxpayer who pays amount B as described in subsection 118.02 (2) of the Federal Act on behalf of an individual who would be entitled to the tax credit described in subsection 9 (23) for a taxation year ending after December 31, 2009 if the individual paid that amount is entitled to a tax credit for the year not exceeding the amount of the tax credit to which the individual would have been entitled under that subsection 9 (23) for the taxation year.

Exception, employer

   (2)  A person who employs or retains the services of an individual and who pays amount B as described in subsection 118.02 (2) of the Federal Act on behalf of the individual for a taxation year ending after December 31, 2009 as part of the individual's remuneration is not entitled to a tax credit under subsection (1).

Receipts required

   (3)  No person may claim a tax credit under subsection (1) based on public transit expenses of an individual unless the person, when making the claim, files with the Ontario 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 (4).

Form of receipts

   (4)  The receipts shall indicate,

  (a)  the name of the person who paid the individual's public transit expenses;

  (b)  the name of the individual whose public transit expenses were paid;

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

  (d)  the amount paid for each pass for public transit to which the public transit expenses relate; and

  (e)  the duration of each pass described in clause (d).

Duty to provide receipts

   (5)  Upon receiving payment of public transit expenses of an individual on which a tax credit under subsection (1) is based, 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 (4) to the 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 Taxation Amendment Act (Public Transit Expense Tax Credit), 2010.

EXPLANATORY NOTE

The Bill amends the Taxation Act, 2007 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, 2009. The tax credit is a share of the tax credit offered by the Income Tax Act (Canada). 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.