Doubling of GST Credit for Six Months

To alleviate the financial stress on low-income Canadians who are severely affected by inflation and interest rates, the Government of Canada has proposed a plan to increase 2022-2023 Goods and Services Tax (GST) Credit by an additional six months period.

Before we can discuss the proposed enhancements, first a background on GST credit and its current benefits. The GST credit is intended to assist low-income Canadians to partially offset the GST paid by them and their families. The GST credit benefits are paid in four equal instalments in April, July, October and January. The amounts paid through the benefit depends on family income and size. The GST credit is indexed to inflation based on Consumer Price Index (CPI) as reported by Statistics Canada. For the period of July 2022 to June 2023, eligible individuals are entitled to the following amounts:

Single: $467

Married or Common-law:$612

Single Parents: $612

Each Child Under 19: $161

As mentioned earlier, since GST credit is targeted towards low-income individuals, the combined family income amounts derived from income tax returns are used to calculate the benefit amounts. For 2021 tax year individuals with family income less than $39,826 will receive full benefit amounts. Above $39,826 threshold, the benefits are lowered as the income increases and eventually the benefits will disappear at $49,200 for a single person without children.

Due to the sharp rise in inflation and the extra financial burden on individuals and families, the Government of Canada has allocated $2.5 billion dollars in additional GST credit for the period of 2022-2023 by doubling the GST benefits for an additional six month period. The additional six month period amount is equal to two GST credit instalment payments.

Let us look at some examples:

1) A couple with two children with an annual income of $30,000 are entitled to the following GST credit and enhanced amounts:

Married couple amount: $ 612
Two children amount x 2: $ 322
Total GST Credit: $ 934

July 2022-Dec 2022 Instalment: $ 467 (934 / 2)
January 2023-June 2023 Instalment: $ 467
Additional July - Dec 2022 Amount: $ 467(Under the new proposal)
Total GST Credit (Revised): $1,401

2) A single mother with one child and an annual income of $20,000 is entitled to the following GST credit and enhanced amounts:

Single parent amount: $ 612
One child amount $ 161
Total GST Credit $ 773

July 2022-Dec 2022 Instalment: $ 386(773 / 2)
January 2023-June 2023 Instalment: $ 386
Additional July - Dec 2022 Amount: $ 386(Under the new proposal)
Total GST Credit (Revised): $1,158

As long as you have filed your 2021 tax return, there is no need for recipients to apply for the enhanced GST credit benefits. According to the CRA, the enhanced GST credit will be paid to all GST credit recipients who have filed their 2021 tax returns, as a one-time lump-sum payment before Christmas 2022.