Canby Transit Tax: Rates, Registration, and Late Penalties

The Canby transit tax is a 0.6% payroll and self-employment tax that funds Canby Area Transit. Employers owe it on wages paid for work performed inside the Canby transit district, and self-employed individuals owe it on net earnings over $400 from work performed in that same area.¹

Who Owes the Tax

Two groups pay. Any employer paying wages for work performed inside the district owes the tax, regardless of where the business is headquartered. What matters is where the work happens.² Send a technician into the district for a week, and the wages for that week are taxable.

Self-employed individuals, independent contractors, sole proprietors, and individual partnership members also owe the tax if they earn more than $400 in net self-employment income from work performed in the district.¹ In a partnership, each partner files and pays individually rather than through the partnership entity.²

Where the District Line Falls

The taxable area is the Canby Urban Growth Boundary, which extends somewhat beyond the formal city limits.¹ If your operations straddle the line, split your payroll and pay only on wages tied to work inside the boundary.

Rate and Taxable Wages

The rate is 0.6%, or $6.00 per $1,000 in taxable wages. A business with $100,000 of qualifying payroll in the district owes $600 for the period.² Self-employed individuals apply the same 0.6% to their net earnings from district-based activity.³

Taxable wages are defined broadly and include salaries, commissions, tips, bonuses, fees, and payments to deferred compensation plans.² Start from gross payroll for in-district work, not base salary alone.

What Is Excluded

A few narrow categories fall outside the tax:

Compensation ministers and religious order members earn while performing religious services. Religious work performed as an independent contractor is not covered by this exclusion.
Insurance-related income earned by insurance agents. Other income the agent earns from non-insurance work is still taxable.
Distributions from C corporations and S corporations.

These exclusions come from the city’s transit tax guide.² The guide does not address whether employer-paid health insurance premiums or Section 125 cafeteria plan contributions count as taxable wages. If you offer those benefits, contact the city’s transit tax office before filing.

Registering Your Account

If you already hold a Canby business license, your business license number is your transit tax account number. Give that number to your payroll service along with your wage information so returns post correctly.¹

Entities not required to carry a Canby business license complete a separate transit tax registration form, available on the city’s transit tax page. The form asks for your Federal Employer Identification Number, legal business name, any DBAs, and contact information.¹

When and How to File

Most businesses file quarterly. Returns are due by the last day of the month after each calendar quarter closes:

January through March: due April 30
April through June: due July 31
July through September: due October 31
October through December: due January 31

The city mails return forms to registered employers before each quarter ends, and fillable forms are also posted on the city’s website. File every quarter, even one with no in-district wages. Skipping a zero-tax return puts your account out of compliance.²

Mail returns and payments to Canby Area Transit, PO Box 930, Canby, OR 97013-0930.²

Annual Reporting for Small Payers

If your business only occasionally works in the district and owes $120 or less per year (averaging $30 or less per quarter), you can ask the transit tax office to switch you to annual reporting. Annual returns are due by January 31 following the tax year.²

What a Late Filing Costs

Penalties stack:

10% of the unpaid tax as soon as the return is past due.
An additional 15% if the balance remains unpaid more than 30 days after the due date.
18% annual interest on the unpaid tax, calculated daily from the due date until paid.

One day late draws the 10%. Thirty-one days late brings the combined penalty to 25% of the original tax, with daily interest running on top.⁴

A separate 10% fee applies when a payment arrives without the tax return form. That fee is calculated on the total tax due and took effect July 1, 2024.¹ Always send the form with the check.

1
City of Canby. Canby Area Transit Tax
2
City of Canby. Canby Area Transit Tax Guide for Businesses
3
American Legal Publishing. Canby, Oregon Code of Ordinances – Chapter 3.24 Public Transportation Payroll and Self-Employment Tax
4
City of Canby. Canby Area Transit Quarterly Payroll Tax Return