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GST / HST Credit

The GST/HST Credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay. Understanding who qualifies for this credit, how to get it, how much you can expect to receive, and when payments are made is crucial for financial planning. Let’s delve into these aspects based on the Income Tax Act and related regulations.

Who Qualifies for the GST/HST Credit?

Eligibility for the GST/HST credit is determined by the Canada Revenue Agency (CRA) based on your income tax and benefit return. You must meet the following criteria:

  • Be a Canadian resident for income tax purposes in the month before and at the beginning of the month in which the CRA makes a payment.
  • Be at least 19 years old, have (or had) a spouse or common-law partner, or be (or have been) a parent and live (or lived) with your child.

Notably, the Income Tax Act does not require individuals to pay GST/HST to be eligible for the credit, making it accessible to a wide range of taxpayers, including those with tax-exempt income under certain conditions.

How to Get the GST/HST Credit

To receive the GST/HST credit, you must file an income tax and benefit return every year, even if you did not earn income in the year. The CRA automatically determines your eligibility when you file your return. There is no need to apply separately for the credit.

How Much You Get

The amount of GST/HST credit you receive is calculated based on your adjusted family net income. The credit is reduced by 5% of the amount by which your adjusted family net income exceeds a specific threshold, which is updated annually to reflect inflation and other economic factors. The credit includes a base amount plus amounts for spouses, common-law partners, and eligible dependents. During certain periods, such as the COVID-19 pandemic, additional amounts were deemed to have been paid to eligible individuals to provide extra financial support.

When You Get It

The GST/HST credit is paid quarterly—in July, October, January, and April. If you are eligible, your payments will start after the CRA processes your income tax and benefit return for the previous year. For example, if you file your 2023 return in April 2024, your payments for the 2024-2025 benefit year would start in July 2024.

Special Considerations

  • COVID-19 Adjustments: During the COVID-19 pandemic, additional deemed payments were made to eligible individuals to help offset the economic impact. These adjustments were calculated based on specific formulas outlined in the Income Tax Act.
  • Indigenous Peoples: Income that may be eligible for tax exemption under certain conditions does not affect the calculation of the GST/HST credit, ensuring equitable access to the credit for Indigenous peoples.
  • Quick Method of Accounting for GST/HST: For GST/HST registrants using the Quick Method of accounting, the differential between the GST/HST collectible or collected and the net remitted amount is considered government assistance and included in income, which could affect the adjusted family net income and, consequently, the GST/HST credit amount.

An Example with a Family of Four

The GST/HST credit is a non-taxable amount paid quarterly to help individuals and families with low and modest incomes offset all or part of the GST or HST they pay. The amount of GST/HST credit a family receives, as well as the maximum income they can earn before the credit begins to phase out and is eventually eliminated, is determined based on the family’s net income, the number of children in the family, and whether there is a single supplement applicable.

For a family of four, which typically includes two adults and two children, the GST/HST credit amounts for the year 2023 are as follows:

  • Adult maximum: $325 per adult
  • Child maximum: $171 per child

Therefore, for a family of four with two adults and two children, the total maximum GST/HST credit amount would be:

  • 2 adults x $325 = $650
  • 2 children x $171 = $342
  • Total maximum GST/HST credit = $650 + $342 = $992

The family net income at which the GST/HST credit begins to phase out for the year 2023 is $42,335. This means that families with a net income above this threshold will see their GST/HST credit amount gradually reduced. The credit is eventually eliminated for families with incomes exceeding certain levels. The phase-out is calculated based on the family’s net income and the number of children, with the credit decreasing as income increases beyond the $42,335 threshold.

In conclusion, the GST/HST credit is a valuable financial support mechanism for Canadians with low and modest incomes, helping to alleviate the burden of GST/HST expenses. By understanding the eligibility criteria, how the credit is calculated, and when payments are made, individuals and families can better plan their finances and take full advantage of this benefit.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service

Nizam Shajani, Partner, LLM, CPA, CA, TEP, MBA

I enjoy formulating plans that help my clients meet their objectives. It's this sense of pride in service that facilitates client success which forms the culture of Shajani CPA.

Shajani Professional Accountants has offices in Calgary, Edmonton and Red Deer, Alberta. We’re here to support you in all of your personal and business tax and other accounting needs.