Transit passes

If you pay for or provide your employee with public transit passes, it is usually a taxable benefit for the employee. Public transit includes transit by local bus, streetcar, subway, commuter train or bus, and local ferry.

If your employee pays for some of the cost of buying public transit passes (for example, through payroll deductions), he or she may be able to claim the Public Transit Tax Credit when filing his or her individual income tax and benefit return.

Report the taxable benefit on the employee’s T4 slip in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the slip.

Report the total of the taxable benefit (code 40) and the amount the employee paid to buy the transit pass (payroll deductions) in the “Other information” area under code 84 at the bottom of the employee’s T4 slip.

Transit passes-employees of a transit company

If your company is in the business of operating a bus, streetcar, subway, commuter train or bus, or ferry service, and you provide free transit passes to your employees or their families, special rules apply.

If you provide free or discounted passes to a current or retired employee of one of the businesses mentioned above, and the passes are only for the employee's or the retiree’s use, there is no taxable benefit for the employee or the retiree.

If you provide free or discounted passes to a member of your employee's or retired employee's family, the fair market value (FMV) of the pass is a taxable benefit for the employee. Report the retiree's benefit using code 028, “Other income” in the "Other information" area at the bottom of the T4A slip.

For examples of situations where transit passes are considered taxable benefits, go to Examples – Employees of transit companies.

Payroll deductions

If the benefit is taxable, it is also pensionable. Deduct income tax and CPP contributions. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums.

Reporting the benefit

Report the taxable benefit in box 14, "Employment income," and in the "Other information" area under code 40 at the bottom of the T4 Slip.

Report the total of the taxable benefit (code 40) and the amount the employee paid to buy the transit pass (payroll deductions) in the "Other information" area under code 84 at the bottom of the employee's T4 slip. For more information, see T4 – Information for employers.

Forms and publications

Income Tax Folio S2-F3-C2, Benefits and Allowances Received from Employment

Date modified:

2016-12-08