New tax credit for those who use public transit

The federal government’s 2006 budget presented a new tax credit for people who regularly use public transit. This credit will be available to anyone who purchases monthly transit passes or passes for a longer duration.

According to the government, the tax incentive is designed to promote use of public transit  to help ease traffic congestion and improve the environment. It will provide regular transit users with about $370 million in tax relief over the next two years.

The tax credit came into play July 1. Commuters who purchase a monthly public transit pass will have an opportunity to claim a 15.25 per cent tax credit when they submit their 2006 income tax return next April. The federal government estimates the credit will save someone who purchases an $80 transit pass each month about $150 per year. Transit users will only get the benefit of six months’ worth of the tax credit for 2006.

To qualify for the tax credit, transit users will have to keep all their passes and receipts as verification.

For more information on the transit tax credit, click here.