CANADA GST/HST TAX CREDIT

What is it?

This refundable tax credit provides some relief to low-income families for the GST/HST  they pay. As a result, entitlement to the GST credit is based on a taxpayer’s income. Eligibility is automatically determined based on income reported in income tax return for the previous year or two years, sometimes referred to as the “base years”. The credit is calculated based on that prior income, even though it is not paid in either of those years.

The credit is paid quarterly, in July, October, January, and April.

If a taxpayer is married, then their eligibility is based on their net family income, i.e., income reported by the taxpayer and their cohabitating spouse.

Residency eligibility:

To qualify, a person must be a resident of Canada at the beginning of a payment month.^[1]

Age eligibility:

Eligibility is determined by age at the end of the month before the payment:

• If the individual is 18 or younger, the payment is made to their parent or guardian.
• If the individual is 19 or older, the payment is made directly to them.

In other words, a person must turn 19 before the payment month to be eligible to receive it themselves.

The payment amount is based on a previous tax year. For example:

Let’s say a child turns 19 in March 2025. The child will be entitled to receive their own payment in April 2025. But the payment will be based on the 2023 tax year. Therefore the child will need to file a 2023 tax return to receive the payment.^[2] In 2023 the child will have turned just 17. Tax preparers should keep this in mind when advising on which years must be filed.

Rule of Thumb: In the year a person turns 17, they should file a tax return if their birthday is March 31 or earlier.

From the parent’s perspective, they will still receive the January 2025 payment for the child because the child was 18 on December 31, 2024—provided the child lives with them and is financially dependent.

A person under 19 can qualify to receive the benefit in their own name only if they have a spouse or if they are a parent living with their child.

In all cases, a tax return must be filed to receive the credit.

How much is the credit?

For the payment period of July 2025 to June 2026 (2024 base year), the basic amount is $349 per single person or spouse, and $184 for children.

A single person with a net income over $11,337 is entitled to a single’s supplement up to $184 for a total possible credit of $533.

The credit is reduced by 5% times the amount by which family net income is greater than $45,521.^[3] For example, if family income is $50,000 then the clawback is 5% X ($50,000 - $45,521) which is $224.

A person’s marital status at the beginning of the month of payment matters in deciding whether to use the income of one or both spouses in the calculation of the credit (even though the calculation is based on income from one or two years prior, when the spouses may have been single).^[4]  This is one reason, among others, for reporting a change in marital status without delay.

The CRA provides calculation sheets for different years.

What if a person’s spouse is non-resident?

The credit will be calculated as if the person is single.^[5]

How do you apply for the credit?

For residents who are not newcomers, the credit is automatically applied for when they file a tax return—no special steps are needed in UFile.

If the person has a spouse, both spouses must file tax returns in order to receive the full family benefit. This is because the benefit calculation is based on family income, and the CRA requires both spouses to confirm their spousal status.

Newcomers (those resident in Canada for the first time in the tax year) initially apply by submitting form RC151 or forms RC66 and RC66SCH as early as possible. To receive continuing benefits they must file income tax returns like any resident.

Who is the credit paid to?

For couples, the credit is issued to the spouse whose tax return is assessed first. If a client’s return is prepared at the clinic but their spouse’s return is not, UFile may show the credit as payable to the client. However, the payment will go to the spouse if the spouse’s return was processed before the client’s.

References:

• GST/HST Credit, Guide RC4210
• Income Tax Act, s.122.5.