Voucher Program
Examples of ways an employer can use Commuter Bonus Vouchers as a benefit to employees
Case #1: the employer has decided to cover some or all of the transportation cost.
The employer orders vouchers in chosen amounts, distributes the vouchers monthly to eligible employees and takes a business expense tax deduction for the cost of the vouchers. With the voucher, the employee has received a transportation subsidy that is a tax-free benefit to the employee (up to $115 per employee per month). The employer decides on the subsidy amount. When the voucher is less than the full cost of the transportation pass, the employee pays the difference when buying the pass.
Case #2: the employer decides to allow the employees to use their own wages through a pre-tax payroll deduction to pay for some or all of the cost of public transportation.
To do so, the employer buys vouchers in denominations equal to the cost of the transportation passes needed by the employees. Some or all of the cost is recovered from the employee through a pre-tax payroll deduction up to $115 (total combined with any tax-free benefit) per employee per month. For instance, the employer may buy a $72 voucher for Jane Doe and recover $72 pre-tax from Jane’s wages. Or the employer may choose to share the cost with Jane by providing a $20 subsidy, tax-free to Jane and a business tax deduction for the company. Jane then receives a $72 voucher but pays only $52 through a pre-tax payroll deduction for the $72 voucher. Jane redeems the voucher for a $72 monthly bus pass. Jane will save 20-40% on the amount she pays toward her bus pass plus she will benefit additionally from any tax-free subsidy provided by the company.
See Tax Laws [ .PDF 71kb] for information on Tax Laws for commute related expenses. Please consult with your tax attorney or accountant for interpretation of tax codes.
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