GST/HST

GST and HST credit refer to tax-free quarterly payments that help low and modest-income earners in Canada recover some or all of the sales tax paid on goods and services. Between 2019 and 2020, nearly 11 million Canadians collected at least one GST/HST credit payment.

This article will explore how the credit system works, who is eligible, how to apply, the payment process, and the payments you are entitled to receive under GST/HST credit.

Payment Calendar

What is GST/HST?

Goods and Services Tax (GST) and Harmonized Sales Tax (HST) are two types of sales tax applied on most goods and services sold in Canada.

While GST is a federally levied sales tax applied nationwide, HST combines federal and local provincial tax. It is implemented in five Canadian provinces: Newfoundland/Labrador, New Brunswick, Nova Scotia, Ontario, and Prince Edward Island.

Below, you will find a Province and territory-level GST/HST sales tax percentage breakdown.

Sales tax is typically charged every time you purchase something in Canada.

As you can imagine, this can accumulate to a notable amount by the year's end. On average, Canadians may pay nearly $5,000 in sales tax in GST and HST — which is a decent chunk of annual income for those paying low to modest salaries.

Purpose

Those with lower after-tax income tend to spend more than those with higher after-tax income since they can afford to save more due to higher residual income.

GST/HST credit was introduced in 1991 — the same year as when the GST tax came into effect — to compensate low and modest-income Canadian families for some of the sales tax they paid.

Eligible individuals and families receive this credit in a non-taxable amount quarterly (four times a year).

Requirements

To qualify for the credit, you must be a Canadian resident one month prior, and at the start of the month in which the Canada Revenue Agency (CRA) makes a payment.

Here are some additional requirements for GST/HST credit. You must meet at least one of the following criteria:

• You are 19 years of age or older.
• You have/had a spouse or a common-law partner,
• You are/were a partner and live/lived with your child.

As mentioned before, GST/HST credits are aimed at low to modest-income individuals and families. If you meet or exceed the income threshold set by CRA for this credit, then you will not qualify.

Here is a breakdown of the GST-HST income cap for the 2020 base year, based on your family structure:

• If you're a single person, your adjusted net income should be lower than $48,012.
• If you're a single parent, your income threshold will be between $53,992 to $63,412, depending on the number of children you may have.
• If you're married or are a common-law couple, your income requirement will be between $50,852 to $63,412. The specific amount will differ based on if and how many children you have.

How To Apply

Most Canadians do not have to fill any forms to apply for this credit. Based on your net annual income, the CRA will automatically determine if you qualify when you file your tax return.

Even if you did not make any income, make sure to file your tax return to start receiving the credit payment.

If you’re a new Canadian resident, you must fill and submit one of the following forms to qualify for the GST/HST credit:

• If you have children: Fill and sign Form RC 66-21e Canada Child Benefits if You Have Children. This application is required for all programs under CRA. Ensure that the primary caregiver for your children fills the form.

If there is a female parent in the household, she is considered the primary caregiver by default and will be the one responsible for filling out the form. If the other parent is the child's primary caretaker, they will have to obtain a signed letter from the female parent stating the other parent is the one primarily responsible for all children in the home.

If you’re a same-sex couple, then either one of you can apply for all children. Mail the letter with the application to your local tax center.

• If you do not have children: Fill and sign Form RC151-21e GST/HST Credit Application for Individuals Who Become Residents of Canada to apply for the sales tax credit. Once completed, mail the form to the tax center that serves your province or territory.

If the CRA determines that you’re eligible for the credit payment, you’ll receive a notice detailing your approval and how much you will get.

Payments Explained

Your payment amount depends on your family structure, how much money you made the previous tax year-end, and how many children you have.

The Government of Canada has a Child and family benefits calculator on their website that you can use to get an estimate of how much you can expect to receive.

They also have a full GST/HST credit payment chart available that shows how much yearly payment you may be entitled to depending on your marital status, family size and net family income.

• Those that are single with no children can get between $150.60 to $456 depending on their net income.
• Individuals that are unmarried and have children can earn between $13.60 to $1,226, depending on how many children there are.
• Those married or with a common-law partner may receive between $42.60 to $598, depending on your adjusted family net income.
• Those married or with a common-law partner who has children may receive between $13.60 to $1,226 depending on the number of children and net household income.

If you accidentally received more than the calculated credit amount, CRA will send you a notice of the overage amount that you will have to return. They will keep the future credit payments and tax refunds till you return the excess amount.

Payment Dates

Instead of lump-sum, the CRA sends GST/HST payment four times a year. You can expect the payment on

• July 5th
• October 5th
• January 5th
• April 5th

If your GST-HST credit payment calculated in July 2022 is under $50 per quarter, you will receive the entire year’s benefit in a lump sum in the same month.

You can receive the payment via mail or direct deposit to your bank account. If you do not receive your compensation within 10 working days from the due date, you may call CRA at 1-800-387-1193.

They also allow you to view your payment status through your online account on their website or via CRA’s MyBenefits mobile app.

6 Changes That Can Affect Your Eligibility

Change is a normal part of life, but there are specific changes that CRA wants to know about since they can impact your GST/HST eligibility or payment amount.

• The number of children you’re caring for has changed: Notify CRA if you had a baby, a child starts to live with you, or you are sharing custody of a child.

Notify the CRA if a child who used to live with you full-time has moved, gotten married or common-law partner, became a parent, or passed away.

• Your marital status has changed: Let CRA know if you got married or became a common-law partner by the end of the month, concluding the month when the marital status change happened.

Only one GST/GST credit is allowed per family. Once you notify the CRA of the change, they will adjust either you or your partner’s payment to include you both. If both partners continue receiving payment separately, then one of you will have to repay the amount after you notify CRA of the change.

Married or common-law couples who are separated must inform the CRA of the change only after being separated for at least 90 days.

• The person receiving the GST/HST credit has died: GST/HST credit payments cease after the recipient dies. If CRA sends a payment following the recipient's death, that payment must be returned. You will also have to let them know the date the recipient died.

If the decedent was the GST/HST recipient in the family, then CRA will automatically determine the eligibility of the surviving spouse or common-law partner. If the decedent were unmarried but was getting credit for a child, the payment would go to the child’s new caregiver.

• You’re moving: If you’re moving, you must immediately notify the CRA about your new address. Even if you were receiving payments through direct deposits and your bank hasn’t changed, this holds true.
• Citizenship status has changed: Since the credit benefits are only for Canadian citizens, you must let CRA know if you or your spouse or common-law partner are no longer a Canadian resident.

Provincial and Territorial Programs

CRA runs several provinces and territory-specific benefits programs related to GST/HST. Suppose you qualify to receive GST/HST credit. In that case, you may also be eligible for a related program based on where you reside:

• BC climate action tax credit
• New Brunswick harmonized sales tax credit
• Newfoundland, and labrador income supplement
• Newfoundland and labrador seniors benefit
• Northwest territories cost of living offset
• Nova Scotia affordable living tax credit
• Ontario sales tax credit
• Prince Edward Island sales tax credit
• Saskatchewan low-income tax credit
• Yukon government carbon price rebate

The provincial and territorial program credit payment that you’re eligible for will be combined with the GST/HST credit payment.

This holds true for all programs except the Ontario Sales tax credit, which will come as a separate payment.