Tax tips for commuters

Why read this?

You:

– take public transit,

– drive to client meetings or worksites, or

– have moved closer to work.

How to claim the public transit tax credit

It’s a 15% non-refundable tax credit, and expenses must be claimed in the tax year in which they were incurred, says Claudio Saverino, senior manager, Tax, at BDO Canada in Markham, Ont.

• If you travel by bus, streetcar, subway, commuter train or ferry, your public transit costs are eligible if you use an unlimited ride pass; or
• within a 28-day period, 20 days’ worth of short-term passes entitling you to at least five days of consecutive travel per pass; or
• an electronic pass to make at least 32 one-way trips during 31 days from a transit authority that records usage and issues a receipt.

• If you pay for your own passes, enter the total cost on Line 364 of Schedule 1 Federal Tax.
• If your employer pays for your passes, it’s a taxable benefit. Since you must include it in your income, you can claim the transit credit, says Saverino.

• Enter the amount from Box 84 of your T4 Statement of Remuneration Paid on Line 364.

TIP: You can claim your spouse or common-law partners’ passes and the passes of your children under 19. The spouse or child can’t have claimed the credit on their returns.

Claim work-related car expenses

• If you usually work away from your employer’s place of business, or in different places, and you don’t get an expense allowance from your employer, you can claim your car expenses.

• Ask you employer to complete form T2200, Declaration of Conditions of Employment. Keep this in case CRA asks for it.
• That will help you complete form T777 Statement of Employment Expenses. Enter the total on Line 229 of the return.
• Submit T777 with your return.

• If you get a vehicle allowance, it isn’t taxable as long as it’s based on a reasonable per-kilometre rate, says CRA. That rate for 2015 is up to 55 cents/km for the first 5,000 km, and 49 cents after that.
• If your allowance doesn’t cover your expenses, declare the allowance as income on Line 104 of the return and then claim all your expenses, says Duncan Peake, partner at Chaggares and Bonhomme in Newmarket, Ont.

WARNING: The cost of driving to and from work isn’t deductible.

WARNING: You must keep all receipts and a record of total kilometres driven to earn income, as well as the date, destination and purpose of the trips.

Claim moving expenses

If you moved at least 40 kilometres closer to a new place of work, you can claim the moving expenses deduction.

• Complete Form T1-M, Moving Expenses Deduction. Enter the total on Line 219 of the return.

TIP: If your moving expenses exceed your eligible income earned in your new job that year, you can carry forward unclaimed expenses and deduct them in the next year. But expenses can’t be carried back.

WARNING: Don’t deduct expenses that are reimbursed by your employer.