Personal accounting has never been more complicated. While plenty of RRSP benefits plans have been set-up over the years by federal and provincial governments to help adults and seniors save money on their taxes, it must be said that confusion persists for plenty of folk when paying their taxes every year.
One recent change to provincial tax law requires some clarification from accounting experts who interpret tax law on a daily basis. The change we are referring to is the Ontario Seniors’ Public Transit Tax Credit. It would not be a surprise if this is new to you, as the tax credit was only authorized to start in 2017.
What Is the Ontario Seniors’ Public Transit Tax Credit?
As the government website indicates, the Ontario Seniors’ Public Transit Tax Credit is designed to help seniors save some money on their taxes each year by allowing them to deduct 15% of their expenses for public transit services. The only prerequisites for qualification are that you are 65 at the beginning of the calendar year and that you reside in the province of Ontario. The 15% can be claimed on your income tax and are meant to lower the overall taxes paid by senior citizens in the province.
How Much Is 15 percent?
There is a cap on how much a senior can claim as a public transit expense. The cap is set at $3,000 per year and thus represents a maximum potential savings of $450 to be listed as an expense. While it is certainly true that countless seniors use more than $3,000 in public transit every year, it still represents a valuable incentive to save your receipts and claim whatever public transit costs you do accrue.
What Constitutes a Qualified Payment Method?
The tax law incorporates all the conventional payment methods available to the public, including:
- Unlimited number of passes in a calendar day
- Electronic payment receipts for bulk purchases (in the form of a PRESTO card)
- Passes for a “set number of rides”
- Passes for a single ride ticket
As you can see, this all but rules out cash as a qualified payment method. As the website, indicates, cash is only acceptable if it is used for “specialized public transit services”; namely, in the form of disability transportation.
So, What Does It All Mean for You?
The Ontario Seniors’ Public Transit Tax Credit means two things for Ontario residents over the age of 65. First, it is a nod of approval from the government to all those seniors still in official employment, and thus still subject to higher income tax payments than ever. Second, it means you should always purchase senior transit fare where possible and save the receipts.
The Importance of Strong Personal Accounting
Keeping track of all your receipts is something we can expect out of the average citizen. However, going through with proper filing of your taxes without missing potential tax breaks requires far more time and effort. Working with an accounting firm is the only way to ensure you make the most of the tax breaks available to you as a resident of Ontario. There are plenty of programs that you may not even know you qualify for, and it is within the purview of a qualified professional accountant to track these programs and ensure you benefit.
Until the next time,