The GST/HST credit has been boosted due to COVID-19

National Post


Last week, the government began sending out one-time supplementary goods and services tax/harmonized sales tax (GST/HST) payments as part of its COVID-19 pandemic relief plan. This measure will provide some extra support to lower- and middle-income Canadians, some of whom may not qualify for the $2,000 monthly Canada Emergency Response Benefit because they are students, seniors or otherwise didn’t meet the requirement to have at least $5,000 of (self-)employment income in either 2019 or in the 12 months prior to the date of application.

The government has estimated an average boost to income for those benefitting from the supplementary payment to be approximately $400 for single individuals and nearly $600 for couples. This is estimated to benefit over 12 million low- and modest-income Canadian families.

Here’s everything you need to know about GST/HST credit, how it works and how much extra you may expect to receive this month.

What is the GST/HST credit?

It was established in 1991, when the GST first came into effect, to ensure that low-income families would be better off under the new sales tax regime than under the former federal sales tax.

The objective of the measure is to help alleviate the regressive features of a consumption tax, where lower-income families spend a greater proportion of their after-tax income on taxable goods and services relative to higher-income families, who tend to save more. The GST/HST credit is meant to compensate lower and middle income families for some of the GST/HST that they pay, which is why the GST/HST credit you get is based on your adjusted family net income.

Which raises the questions: who is eligible for the credit and how much can you get?

Who is eligible for the credit?

You’re generally eligible for the GST/HST credit if you’re at least 19 years old and a resident of Canada for tax purposes for both the month before and at the beginning of the month in which the Canada Revenue Agency makes a payment.

How much is the credit? 

The amount of the credit you receive depends on both your family size and your adjusted family net income. Specifically, for the period from July 2019 to June 2020, based on family net income reported for the 2018 taxation year, an adult receives a basic adult credit of $290 per year. Single adults without children are eligible for an additional credit of up to $153 per year (depending on income) on top of their basic credit, for a total of $443.

Families with children receive an additional basic child credit of $153 per year for each child. Single parents can claim, in lieu of the basic child credit, a credit of $290 per year for one dependent child, and an additional credit of $153 per year per child, on top of their own credit.

The value of the credit is reduced with family net income over $37,789 in 2019-2020. Both the credit amounts and the family net income threshold are adjusted annually for inflation.

How do you apply for the credit?

In most cases, all you have to do to receive the GST/HST credit each year is file a personal income tax return. That’s why it’s important to file a return annually, even if you have no income to report and no taxes to pay.

While the filing deadline for the 2019 tax return has been extended to June 1, 2020, which is one month later than the usual April 30 deadline, if you do receive income-tested benefits, such as the GST/HST credit or the Canada Child Benefit, the CRA is recommending that you still try to file by April 30 to help ensure your benefits can be properly calculated in time for 2020-21 program payments that begin in July 2020.

One-time supplementary COVID-19 increase to the credit

This month, you should have already received the one-time special payment automatically if you normally receive the GST/HST credit. It was either mailed to you or deposited into your bank account.

For the special payment, the annual GST/HST credit amounts will be doubled. The maximum amounts for the 2019-2020 benefit year will double to $886 (from $443) if you’re single and will increase to $1,160 (from $580) if you’re married or living common-law. The per-child amounts for each child under the age of 19 are also doubled to $306 (from $153) and to $580 (from $290) for the first eligible child of a single parent.

Any difference between your new entitlement amount (given these doubled amounts) and what you’ve received so far in regular GST/HST credit payments will be paid out through this new, one-time, supplementary payment. The extra payment amount is calculated based on family net income information from your 2018 tax return.

To illustrate, Christine is single and for the 2019-2020 benefit year, she received an annual base credit amount of $290. Her GST/HST credit entitlement is $290, which is paid in four quarterly payments of $72.50 in July 2019, October 2019, January 2020, and April 2020. Her one-time supplementary payment this month (April 2020) will be an additional $290.

To calculate your entitlement, you can go online and use the CRA’s child and family benefits calculator to get an estimate of your GST/HST credit.