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In some cases, electronic payment cards can also qualify, if the card is used to make at least 32 one-way trips during an uninterrupted period no longer than 31 days, provided you can get a receipt that proves both the cost and usage of the card.

In the tax case, the Canada Revenue Agency denied the taxpayer’s transit credit for the use of his PRESTO card to pay for transit services to commute to and from work in downtown Toronto. The reason for the denial was that the taxpayer, by the time he was reassessed by the CRA in 2015, was no longer able to obtain records from the transit authority relating to his 2013 PRESTO purchases.

The judge estimated that the taxpayer took more than 400 one-way trips in 2013 and, although he was able to produce credit card transaction history for all his PRESTO purchases, this wasn’t good enough for the CRA, as it specifically required proof of usage.

Luckily, the judge was sympathetic to the taxpayer’s plight and, despite lacking the appropriate proof of usage, allowed the credit, saying that “there has to be some guideline by the CRA on an administrative basis that allows for substantial compliance using other evidentiary means where that (transit) organization fails to issue the required documentation.”

This case serves an example of both the trouble and cost associated with administering and enforcing a boutique tax credit.

Financial Post

Jamie.Golombek@cibc.com

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Wealth Strategies Group in Toronto.