Unlocking GST Benefits in Canada

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If you’ve ever made a purchase in Canada, you’ve probably noticed the Harmonized Sales Tax (HST) and Goods and Services Tax (GST) added to your bill. Taxes might not be the most thrilling subject, but getting to know them can actually be pretty useful.

We’re going to make HST and GST easy to understand in this guide. We’ll cover what these taxes are, a bit about their history, and why they matter. You’ll find out how they’re different and why they’re more than an added cost when making purchases. Plus, we’ll dive into the GST/HST credit - what it is, who can get it, how to apply for it, and when you can expect to see the money.

Knowing about HST and GST lets you understand how your money is used with each thing you buy. It’s not only about the extra cost; it’s about helping to pay for things like schools and hospitals that we all need.

Also, understanding these taxes means you can plan your money better and even save some cash through special discounts and tax breaks. Let’s keep exploring to uncover more about these essential taxes and how they affect our lives in Canada.

What are GST and HST?

In Canada, the price tag doesn’t always show the total amount you'll end up paying because there’s often a tax added on. That’s where you’ll come across HST and GST.

GST, or Goods and Services Tax, is a 5% tax added to almost everything you buy, from books and coffee to car repairs, all over Canada.

HST, or Harmonized Sales Tax, is what you get when GST is mixed with the tax your province charges, but only some provinces do this. With HST, instead of paying two separate taxes, there’s just one combined tax that might be more than 5%, but it takes care of both the national and provincial taxes together.

The history and purpose behind GST and HST

These taxes weren’t created just to increase the cost of what you buy. They play a big role in paying for public services. The GST started in 1991, aiming to make tax collection more efficient and ensure everyone contributes to public services like healthcare, education, and infrastructure. The HST came later in some provinces, making tax collection even simpler by combining provincial and federal taxes into one.

Benefits of GST and HST

Let’s break down how HST and GST benefit you in ways that might not be immediately obvious.

First off, when you’re planning your shopping or figuring out your budget for the month, HST and GST help you know exactly how much you’ll spend. These taxes are added to most things you buy in Canada, so you can quickly figure out the total cost of your purchases ahead of time. This means no unexpected costs when you’re checking out, making it simpler to manage your money.

And here’s a bit of good news: not everything you buy has extra tax on it. Things you really need, like basic food, doctor’s visits, and even some types of homes, don’t have HST or GST. This means these important items cost less because they don’t have that extra tax.

Next, the money from HST and GST isn’t just gone; it’s actually used for important things that we all need every day, like schools, hospitals, roads, and services that help us in emergencies. When you pay these taxes, you’re helping out your community and the whole country. It’s a way to make sure everyone chips in to help pay for the things we all use and need.

Lastly, there are special programs that give money back to low-income individuals and families. For instance, every few months, there’s a payment called the GST/HST credit. It’s designed to give back some of the tax money you’ve paid, helping out those who need it the most.

What is the GST/HST credit?

The GST/HST credit is a bit of help from the government, giving some money back to people and families who don’t have a lot of extra cash. It’s like getting a discount on the sales tax (GST or HST) you’ve paid throughout the year on things you buy. The idea is to make life a little easier for those who need it most.

Why does this credit exist? It’s all about fairness and support. The federal government knows that paying taxes on goods and services can be tougher on people with lower incomes. So, they created the GST/HST credit to give a bit of that money back. It helps make sure everyone can afford the basics, like food and clothes, by lowering the overall tax burden on those who find it hardest to pay.

Understanding eligibility for the GST/HST credit

You can get the GST/HST credit if the Canada Revenue Agency (CRA) considers you a Canadian resident for income tax purposes both the month before and the start of the month when they send out the payment. Before the Canada Revenue Agency (CRA) sends out money every three months, you need to be 19 years old or older the month beforehand. If you’re younger than 19, then during that time, one of these situations must apply to you:

• You have (or had) a husband, wife, or partner you live with like a spouse.

• You are (or were) taking care of your child and living with them.

Parents of children can receive the GST/HST credit for each of their children as long as they meet all of the following criteria. The child:

• is your child, or is dependent on you or your spouse or common-law partner for support.

• is under 19 years of age.

• has never had a spouse or common-law partner.

• has never been a parent of a child they lived with.

• lives with you.

How your HST/GST credit is calculated

Once you meet the qualifications, figuring out if you can get the GST/HST credit is mainly about looking at a few key things about yourself and your life situation. This credit is a way to help people and families with lower incomes by giving them a bit of money back for the sales tax they pay. Here’s what matters:

How much money you make

The biggest thing that affects how much GST/HST credit you get is how much money you make. There’s a certain income level where if you make less than that, you’ll get the credit. If you make more, the amount of credit you get starts to go down. Think of it like a sliding scale: less income means more credit, and as your income goes up, the credit decreases.

Family status

Being single or having a family affects it. If you’re on your own, the amount of money you can make and still qualify is lower than if your family includes a spouse, common-law partner, or children. The calculation considers the adjusted family net income of you and your spouse or common-law partner. Plus, if you have kids, you get a bit extra for each child. This is because the federal government knows that families with children have more expenses.

Special circumstances

Changes in your life matter. If you recently got married, divorced, had a baby, or lost someone close to you, these changes can affect your eligibility. It’s because these life events change your family size and needs, which the federal government considers when deciding who gets the credit.

How to apply for the GST/HST credit

Applying for the GST/HST credit is simpler than it might seem. This credit is a way to get some money back if you’ve paid GST or HST on things you’ve bought; especially helpful if you’re not making a lot of money. Here’s how to do it:

Step 1: File your tax return

Even if you didn’t make any money last year, file your tax return anyway. You need to file your taxes every year to be eligible for the GST/HST credit. By filing, you let the federal government know you’re out there and might need this credit.

Step 2: Wait for the CRA to review your file

There is no separate application needed. Once you file your taxes, the Canada Revenue Agency (CRA) automatically checks to see if you qualify for the GST/HST credit. This review is done once a year, so if your situation changes (like you make more or less money), your revised annual credit amount might change, too.

That’s it! If you’re eligible, you don’t need to do anything extra to get your GST/HST credit. After you file your tax return and the CRA does its calculations, it will automatically send you the credit if you qualify. This process is designed to be easy, ensuring those who need the extra support can get it without jumping through too many hoops.

If you’re a newcomer to Canada

If you’ve just moved to Canada and want to apply for the GST/HST credit, here’s what you need to do, depending on your situation:

If you have kids

Fill out and send in Form RC66, which is the application for various child and family benefits. You also need to complete Form RC66SCH. This form collects details about your citizenship, where you live in Canada, and your income. It’s important for understanding your eligibility for benefits.

If you don’t have kids

You should fill out and send in Form RC151. This form is specifically for new residents of Canada to apply for the GST/HST credit for the year you moved to Canada.

Common misconceptions about the GST/HST credit

Understanding the GST/HST credit can sometimes be confusing, and there are a few common misunderstandings about how it works. Let’s clear up some of these misconceptions:

You need to apply every year

Once you file your taxes, you don’t need to apply for the GST/HST credit every year. The Canada Revenue Agency (CRA) will automatically review your tax return and determine if you’re eligible for the credit. If you are, they’ll start sending it to you without you having to do anything else.

Everyone gets the same amount

The amount of GST/HST credit you receive isn’t the same for everyone. It varies depending on your income, your family situation (like if you have a spouse or dependents), and where you live. People with lower incomes generally receive more, and the amount decreases as your income goes up.

Only adults with children get it

While families with children might get more money because there are additional benefits for children, you don’t need to have kids to qualify for the GST/HST credit. Single people and couples without children can also be eligible based on their income.

You can’t get the credit if you owe taxes

Owing taxes doesn’t disqualify you from receiving the GST/HST credit. Your eligibility is based on your net income, not whether you have a balance owing come tax time. So, even if you owe money on your tax return, you could still receive the GST/HST credit. However, your credit might be used to pay back what you owe.

It’s taxable income

The GST/HST credit is not considered taxable income, so you don’t have to report it on your tax return the next year. This means it won’t affect your income level for other benefits and credits.

Understanding your GST/HST credit payment

When it comes to the GST/HST credit, figuring out how much money you might get back and when you can expect it can feel like a mystery. Let’s clear up some of that confusion.

The amount of money you get from the GST/HST credit depends on a few things, like your income (if you’re single) or your family’s net income (if you have a spouse or common-law partner), and if you have children under 19 years of age.

You can check out the Canada Revenue Agency’s (CRA) GST/HST payment chart for specific details about your maximum annual payment. You can also get a rough idea of the amount you might receive as a rebate by using the CRA’s child and family benefits calculator.

The GST/HST credit is paid out in four installments throughout the year. These quarterly payments are usually made on the 5th of the month during July, October, January, and April. If the 5th day of the month is a Saturday, Sunday, or a public holiday, the payment will be made on the last workday before the 5th.

You can choose to have the money deposited directly into your bank account via direct deposit, which is faster and more convenient. If you prefer, you can also receive it as a cheque in the mail.

Other Canadian credits and rebates to explore

Once you’ve got a handle on the GST/HST credit, there’s more good news: there are other rebates and credits out there that could put money back in your pocket or save you some on taxes, especially if you live in certain provinces or have specific needs.

Some provinces offer their own extra credits that work a lot like the GST/HST credit, like the Ontario Sales Tax Credit. If you qualify for the GST/HST credit, you might automatically get these provincial and territorial credit payments, too. They’re designed to help with the cost of living in those provinces and territories. Just like with the GST/HST credit, usually, you don’t have to do anything special to apply. Filing your taxes is enough to let the government know you might qualify.

If you’re living in Canada, these extra benefits and credits up for grabs could help lower your costs or give you money back at tax time. Many of these benefits can be especially helpful if you’re raising a family, in your golden years, or hitting the books as a student.

Family rebates

Raising kids can be pricey, but there are tax breaks and benefits to ease that burden. You might get money back for things like daycare, sports or arts programs for your kids, and even for simply having children. These extras help cover the costs of keeping your kids happy and healthy. Some of these extra benefits include:

• Canada Child Benefit (CCB).

• Child Care Expense Deduction.

• Provincial and territorial family benefits, such as Alberta’s Child and Family Benefit, Ontario’s Child Benefit, and Quebec’s Family Allowance.

• Canada Workers Benefit (CWB)

• Children’s Fitness Tax Credit

• Children’s Arts Tax Credit

• Education Savings Incentives, such as the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB)

Senior benefits

Once you’re retired, every penny counts. The government offers special tax credits for seniors to help with living expenses. This might include credits for age, pension income, and even reductions in property taxes for some. Here are a few examples of benefits that the Canadian government offers for seniors:

• Age Amount Tax Credit

• Pension Income Tax Credit

• Medical Expense Tax Credit

• Home Accessibility Tax Credit (HATC)

• Guaranteed Income Supplement (GIS)

• Old Age Security (OAS) Pension

• Caregiver Amount Tax Credit

Student savings

School is expensive, but being a student also comes with tax perks. You can often get credits for tuition fees, textbooks, and sometimes even for your bus pass. These credits can lower the amount of tax you owe, making education a bit more affordable. Some of these student savings benefits include:

• Tuition Tax Credit

• Canada Training Credit

• Canada student grants and loans

• Scholarship, fellowship, and bursary income exemption

• Moving expenses deduction

• Non-refundable tax credit for interest paid on government-recognized student loans

• Lifelong Learning Plan (LLP)

How to fully benefit from your GST/HST credit

The GST/HST credit is like a financial boost from the government to help lower-income individuals and families with the sales taxes they pay. Here's how to make sure you're getting the most out of it and improving your overall financial situation:

File your taxes every year

Even if you didn’t earn money or your income was very low, still file your taxes. This is how the government knows you might qualify for the GST/HST credit. If you don’t file, you might miss out on money that could help you.

Keep your information updated with the CRA

If anything big changes in your life, like moving, getting married, having a baby, or getting divorced, tell the CRA about it. These changes can affect how much credit you get. The CRA needs your current info to give you the right amount.

Understand how the credit works

Knowing the ins and outs of the GST/HST credit can help you a lot. For example, it's based on your income, so if your financial situation changes, your credit amount might change too. Being aware of how it's calculated can help you plan your finances better.

Plan for your payments

Since the GST/HST credit is paid out four times a year, it’s a good idea to think ahead about how you’ll use these payments. Maybe you’ll put them towards essential expenses, start building your savings for something big, or even invest a little for the future.

Use the CRA’s online services

The CRA has online tools and calculators that can help you understand your GST/HST credit, among other things. By creating an account with the CRA’s My Account service, you can easily check your credit status, view payment amounts, and update your personal information directly.

Look into other benefits

If you're eligible for the GST/HST credit, there might be other government benefits you can get, too. Explore what's available, like child benefits or credits for working people, to maximize the help you can get.

Ask for help if you’re unsure

If you’re not sure about your eligibility or if you think you should be getting more credit than you are, don’t hesitate to ask for help. You can call the CRA, or if taxes really aren’t your thing, maybe talk to a tax professional. A little guidance can go a long way in making sure you're making the most of your money.