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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.
|January 5||January 5||January 5|
|April 15||April 5||April 5|
|July 5||July 5||July 5|
|October 5||October 5||October 5|
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.
|Province||GST||PST||HST (GST + PST)|
|Prince Edward Island||15%|
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.
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).
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:
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:
|Single parent with one child||$53,992|
|Single parent with two children||$57,132|
|Single parent with three children||$60,272|
|Single parent with four children||$63,412|
|Married/common-law couple with no children||$50,852|
|Married/common-law couple with one child||$53,992|
|Married/common-law couple with two children||$57,132|
|Married/common-law couple with three children||$60,272|
|Married/common-law couple with three children||$63,412|
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 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 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.
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.
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.
Instead of lump-sum, the CRA sends GST/HST payment four times a year. You can expect the payment on
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.
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.
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.
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.
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.
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:
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.