Most of your purchases will be subject to Canada's goods and services tax, or GST, unless you only make purchases from a select range of items that are exempt. Many goods and services, as well as real estate deals and even purchases of goods downloaded from the internet, all have GST tacked on to the price. The harmonized sales tax, or HST, is a combination of the GST and the provincial sales tax in some provinces.
The federal government provides some Canadians and their families with the GST/HST credit since sales tax can dramatically raise daily spending.
What is a GST/HST credit ?
A number of tax credits are included in Canada's tax system. One of the few tax credits that is really paid out in installments and isn't merely factored into how much federal tax you owe or how much of a refund you'll get is the GST/HST credit. The harmonized sales tax (HST), often known as the goods and services tax (GST), is a tax-free quarterly payment intended to reduce the amount of GST and HST that those with low and modest incomes must pay when they buy goods and services. Families and individuals are also eligible.
Additionally, payments made under provincial and territorial tax credit schemes may be included in the GST/HST credit. When you file your taxes, the GST/HST credit is automatically assessed to you.
Depending on your family's income and the number of kids under 19 who are presently living with you, you may have to make individual GST/HST payments.
According to these circumstances, you could get the following in 2023:
- If you're single, $456
- If you have a common-law spouse, $598.
- $157 more for each kid under the age of 19 living with you
Eligibility for the GST/HST credit
You must be a Canadian resident for income tax purposes in the month before to and at the start of the month in which the CRA makes a payment in order to be eligible for the GST/HST credit.
You must also fulfill at least one of the requirements listed below.
- Age requirement: 19 or older
- possess a spouse or common-law partner (or have one)
- a parent who now lives with their child or who previously did so
You can be qualified for half of the GST/HST credit, as well as any applicable provincial and territorial credits, if you share custody of a child.
If any of the following apply to you, you cannot claim GST/HST credits:
- a non-resident for tax purposes of Canada
- an overseas official or a foreign employee who avoids paying taxes in Canada
- incarcerated for 90 or more consecutive days in a jail or other type of penal facility
How to apply for a GST/HST credit
You will automatically be eligible for the GST/HST credit if you are a Canadian resident and file an annual tax return (even if you have no income to declare).
You must complete a form and deliver it to a nearby tax center if you are a new resident of Canada. Whether you have children or not will affect the particular form that is needed.
The Canada Child Benefits Application, or Form RC66, is required if you have children. This form is for all child and family benefits, such as the GST/HST credit but not just.
You'll need Form GST/HST Credit Application for Individuals Who Become Residents of Canada if you don't have children.
You may also apply for the GST/HST credit for your child. If you have filed for and been granted the Canada Child Benefit (CCB), you are probably already eligible for their portion of the GST/HST credit.
The kid may need to be registered for the GST/HST tax credit, though, if you haven't applied for the CCB or have since welcomed another child into your family.
By selecting "apply for child benefits," you may accomplish this through My Account on the CRA website. You must verify your identity, citizenship, and marital status, as well as fill out basic information on your kid, including name, gender, and date of birth.
How to calculate the GST/HST Credit
The Canadian Revenue Agency adds supplements based on children and dependents, family net income, and other factors to the $299 base credit amount to arrive at the GST/HST credit payments. Finally, after your net income hits $38,892, they will gradually cut these payments. Here is a brief breakdown of the fundamental calculations:
- Base credit of $299
- PLUS + credit for a spouse or common-law partner of $299
- PLUS + credit for each kid up to the amount of $157 in addition if the family's income exceeds $9686.
- MINUS - If your net income is greater than $38,892, your GST/HST credit will be decreased by 5%.
Once your income surpasses $38,892, your GST/HST credit will be reduced. If you are single, childless, and earn more than $48,012, you will not be eligible for GST/HST credits. The GST/HST credit computation sheets provided by the CRA can be used to determine how much credit you will be given. Your GST/HST credits and Canada Child Benefits may be calculated using the CRA's online calculator.
How to Request a Credit for GST/HST
Typically, qualified persons are immediately enrolled by the Canada Revenue Agency (CRA). However, if you are a newcomer to Canada or have a kid who is not enrolled in CCB, you might need to apply.
immigrants to Canada Application for GST/HST
Sending one of the following forms to the CRA tax office will allow newcomers to claim for the GST/HST credit:
- For Canadian citizens without children, use Form RC151 to apply for a GST/HST credit.
- Canada's Form RC66 Child Benefits Application for Residents with Children
Credit for GST/HST for a New Child
One who has just moved in with you or is a new kid is also eligible for a tax benefit. There are two methods for doing that: Through "CRA My Account," you may submit a CCB application or add the kid to your household.
Final words
This blog will help you understand the GST/HST credit scenario. You might find it a little complex but you can always take professional help.