Principal Issues: Would the transportation of public school students on a school bus (under a user-pay system) be considered services offered to "the general public" under the definition of public commuter transit services in subsection 118.02(1)?
Position: Probably not.
Reasons: Services offered to such a restricted group of individuals are not services offered to the general public.
XXXXXXXXXX 2009-032332 Andrea Boyle, CGA
July 2, 2009
Dear XXXXXXXXXX :
Re: Public Transit Pass Credit
This is in reply to your letter of May 8, 2009 regarding a proposed "user-pay" school busing system and the eligibility of the expenditures for the public transit pass credit.
You have indicated that under the proposed system all students within the school district, with few exceptions, will be required to pay an estimated $200 to ride the school bus to and from school for the year. You are asking whether or not we would consider that this form of transportation of public school students constitutes "services offered to the general public" as required in the definition of "public commuter transit services" in subsection 118.02(1) of the Income Tax Act.
The particular situation outlined in your letter appears to relate to a factual one, involving specific taxpayers. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are he subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. We are, however, prepared to offer the following general comments, which may be assistance.
All statutory references in this letter are references to the provisions of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended ("Act").
The expression "public commuter transit services" is defined under subsection 118.02(1) and means services offered to the general public, ordinarily for a period of at least five days per week, of transporting individuals, from a place in Canada to another place in Canada, by means of bus, ferry, subway, train or tram, and in respect of which it can reasonably be expected that those individuals would return daily to the place of their departure.
The expression "general public" is not defined in the Act; therefore it must be given its ordinary meaning. "General public" is defined in Canadian Oxford Dictionary Second Edition as "the people of a community collectively, esp. those not enjoying special privileges." A "community" is defined as "all of the people living in a specific locality."
From these definitions, it is our view that a group consisting of only public school students within a given school district would constitute a selected segment or restricted class of individuals and would not meet the definition of "the general public." As such, the services described would probably not meet the definition of "public commuter transit services" under subsection 118.02(1).
We trust that these comments will be of assistance.
Yours truly,
Louise J. Roy
Manager
for Acting Director
Ontario Corporate Tax
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch