2017-0733511E5 Ontario seniors’ public transit tax credit

Principal Issues: Whether the taxpayer is a ‘qualified Ontario transit organization’ that provides ‘Ontario public transit services’ for the purposes of the Ontario seniors’ public transit tax credit?

Position: No, see response.

Reasons: See response.

Author: Underhill, Cynthia
Section: Ontario Taxation Act: section 103.0.1 and subsection 103.0.1(1); Federal ITA: 118.02(1)

XXXXXXXXXX                                                                                                                                   2017-073351
                                                                                                                                                           C. Underhill
January 24, 2019

Dear XXXXXXXXXX:

Re:  Ontario seniors’ public transit tax credit

We are writing in response to your letter in which you asked whether fares paid for using the XXXXXXXXXX qualify for the Ontario Seniors Public Transit Tax Credit (OSPTTC). Thank you for your understanding regarding the delay of this response.

Based on your submission, the XXXXXXXXXX website and our telephone conversation on October 29, 2018, (Underhill/XXXXXXXXXX), the facts as we understand them are as follows:

*    XXXXXXXXXX legal name is XXXXXXXXXX and is a registered charitable organization;
*    XXXXXXXXXX are one of the services offered by XXXXXXXXXX;
*    XXXXXXXXXX provides rides for all citizens, including adults, seniors and children, living in XXXXXXXXXX;
*    Volunteer drivers provide door to door transportation services to all riders using their own vehicle;
*    Volunteer drivers are reimbursed for the cost of operating their vehicle;
*    XXXXXXXXXX is not operated by the Municipality;
*    the XXXXXXXXXX provides funding to XXXXXXXXXX on an annual basis.

Our comments

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of a particular transaction proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R8, Advance Income Tax Rulings and Technical Interpretations.

The OSPTTC provides eligible seniors in Ontario with a refundable tax credit to help seniors with public transit costs. Among other things, to qualify for the OSPTTC, a taxpayer must have made a qualifying payment to a ‘qualified Ontario transit organization’.

A ‘qualified Ontario transit organization’ generally means a business that is authorized under a law of Canada or Ontario to carry on a business through a permanent establishment in Ontario that is one of the following:

a)    a division, department or agency of the Government of Ontario or one of its municipalities, the primary purpose of which is to provide Ontario public transit services
b)    a person operating the Ontario public transit service on behalf of a person described in a) (primary purpose test needs to be met), and
c)    a specialized transportation service provider providing Ontario public transit services.

It does not appear that XXXXXXXXXX is operated by or on behalf of the Government of Ontario or one of its municipalities; therefore the XXXXXXXXXX would not be a business as described under a) or b) above.

A specialized transportation service provider provides specialized transportation services designed to transport persons with disabilities operated solely in Ontario. The transporting must be provided by vehicles that are operated under an agreement between a municipality and a person. Since the transportation services are likely provided under an agreement between the volunteer and XXXXXXXXXX and are not designed to transport persons with disabilities, XXXXXXXXXX would not be considered a specialized transportation provider.

It will always be a question of fact as to whether a rural transportation system meets the requirements to be considered a qualified Ontario transit organization that is in the business of providing Ontario public transit services for the purposes of the OSPTTC.

We trust our comments will be of assistance to you.

Yours truly,

Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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