Metropass economics: 2012 edition

NOTE: This post has been updated for 2013 TTC fares. Click here for the newest information.

Two years ago, a coworker asked me about the value of the Toronto Transit Commission’s Metropass for the average commuter. For lots of people like me in Toronto use transit as their primary mode of transportation, the unlimited-use pass is a necessity, but many people only use transit for going back and forth to work, driving their cars or whatever else on weekends. I wrote this article comparing the cost of 40 trips by cash fare versus buying a MetroPass, taking into account the annual Metropass Discount Plan and the federal transit tax credit. It’s been at least a few fare hikes since then, so I thought I’d update the math here.

As of January 2012, buying tokens in bulk has gone up to $2.60 each, and a Metropass is now $126 per month, or $116.50 if you sign up for a full year of the discount plan. In an average month, a full-time commuter will take 40 trips – to and from work 5 days a week for 4 weeks. 40 token fares costs $104. That means the face value of tokens is quite a bit lower than a transit pass. With tokens, you only pay for the trips you take, and tokens have no expiry date. Which means if you have a sick day one month or decide to ride your bike one day or take a vacation, you’re not out any money pre-paid on your transit pass.

Of course, Metropasses are eligible for the federal transit pass tax credit, which rebates the cost of passes at the lowest federal tax rate. According to the Canada Revenue Agency, that rate is staying at 15% for 2012, so the net cost of the Metropass comes down to $107.10, or $99.03 for the discount pass. Buying a Metropass this year is only saving money over tokens if you travel more than 41 times, or 38 if you sign up for a full year of passes.

So for the average commuter, buying a full year of discount Metropasses is ever-so-slightly better value than just buying tokens, but only if you don’t have any days off. The only way a Metropass is better value is if you buy a full year’s worth of discount passes. For most commuters, it’s probably better to just buy tokens and pay-as-you-go.

What about post-secondary students? In 2010, the TTC introduced the Post-Secondary Student Metropass, available to students enrolled full-time in a post-secondary institution within Toronto. For 2012, the Post-Secondary Metropass is available for $104 per month if a student has purchased the $5.25 photo-ID, and no discount plan is offered. There is no other special post-secondary fare offered, so students who choose not to buy the pass must pay the full adult fare.

The Post-Secondary Metropass does qualify for the tax credit, bringing the net cost down to $88.40, but many students enrolled full-time likely won’t see any benefit for this. For 2012, the first $12,000 or so of income is tax free, because of other tax credits that everyone can claim. Unless you earn at least that much, plus the cost of the transit passes ($1,248 for a full year of post-secondary student passes) you won’t gain any benefit for claiming the tax credit. You can claim it, but you’re already not paying income tax so the credit won’t help.

I don’t have stats to back this up, but I’m guessing that students enrolled full-time in a college or university program probably aren’t also working full time, or at least enough to earn $13,248 a year. That works out to about $13.25 per hour for 20 hours a week, or about 26 hours a week at minimum wage. Well, I guess that’s not unreasonable, and if you were pulling off a schedule like that you’d probably want the freedom of a Metropass. Anyway, I’m going to do the math with the tax credit and without, but keep all this math stuff in mind if you’re a student considering a Metropass.

The jist of that ramble is, for a post-secondary student, a Metropass is worth 40 trips by token, or 34 trips if the student earns enough income to benefit from the transit tax credit.

You know what? Here’s a handy chart. The formatting for this isn’t great – apparently I need to work on my CSS skills.

Fare Type Monthly Cost Cost Net of Tax Credit Ticket/Token Fare Cost Equivalent Trips in Tokens
Metropass $126.00 $107.10 $2.60 42
MDP Metropass $116.50 $99.03 $2.60 39
Post-Secondary Metropass (for low-income students) $104.00 n/a $2.60 40
Post-Secondary Metropass (for higher-income students) $104.00 $88.40 $2.60 34
Student1/Senior Metropass $104.00 $88.40 $1.75 51
Student1/Senior MDP Metropass $93.50 $79.48 $1.75 46

1High school students probably can’t benefit from the tax credit themselves, but parents can claim the tax credit for passes for their children under the age of 19.

In this chart, the number of equivalent trips is the number of trips you would have to make in a month before buying the listed Metropass becomes a better value than just buying tokens or tickets instead. As you can see, the TTC has done a good job of making the Metropass only attractive to people who use transit as their main method of transportation. For the average commuter, tokens are now the better deal.

One more note: under certain conditions, fares paid with a PRESTO electronic fare card may be eligible for the transit pass tax credit. If you use a PRESTO card for more than 32 trips in 31 consecutive days, the transit pass tax credit makes your fares $2.21 net of the tax credit, meaning you’d need to use a discounted tax-deducted Metropass 45 times to get the same value. This will be the best value, however, so far, the Presto card has been implemented in so few places in Toronto that it’s practically useless for most TTC commuters. But keep an eye out for PRESTO to replace the Metropass completely in the next few years.

About Greg Burrell

Greg is an accountant, cyclist and political observer living in Toronto, Canada with too many cats.
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  • Anonymous

    In most places, a pass can pay for itself after about 40 rides – and this is before any tax credit is applied. Toronto is one of the only places where you have to take it at least 49 times for it to begin to pay for itself. Because of this, in many cases it is worth using extra tokens for short tips and stop overs than it is to use a pass – even if it seems wasteful to drop what amounts to an extra $2.60 for such a frivolous ride.

    With that said, there are two reasons why TTC riders should get the pass. First and foremost, is the tax credit. Ya, you might pay more overall, but it is nice to see your sustainable commuting habits rewarded at tax time (and love him or hate him, we have Mr. Harper to thank for this). Second is the convenience. Being able to hop on and hop off of transit services with no perceivable loss as much as you’d like does give you a warm feeling inside. It can even change your whole outlook on transit, as you appriciate its local benefits more rather than being annoyed that the bus is too slow.

    Finally, the Presto card should begin to offer riders the best of everything. You will be able to ride without seeing a physical supply beginning to drop, you will be able to keep track of how often you ride to see if a pass is a worthwhile purchase, and still get a tax credit regardless!

  • Guest

    Thanks for explaining this so well.

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