Are You Eligible for the GST/HST Refund in 2024?

The products and companies tax/harmonized gross sales tax (GST/HST) credit score is a tax-sheltered quarterly payout that helps low- and modest-income households offset their GST or HST funds. This tax credit score could embrace funds from provincial and territorial applications.

In accordance with the Canada Income Company (CRA), you’re eligible for the GST/HST credit score in case you are a Canadian resident over the age of 19.

How a lot must you get through the GST/HST tax credit score?

The quantity you obtain through the tax credit score depends upon elements comparable to your web household earnings, marital standing, and whether or not you’ve any youngsters. To qualify for the credit score, your adjusted web household earnings have to be decrease than a sure threshold. For the 2022 base 12 months (fee interval from July 2023 to June 2024), the brink for the tax credit score ranges from $52,255 to $69,105.

The utmost GST/HST tax credit score for a person is $496, whereas it will increase to $650 for married {couples}. Eligible Canadians will obtain $171 for every youngster beneath the age of 19.

It’s important to maintain your private data up to date to keep away from underpayments or overpayments by the CRA. As an illustration, a rise in a household’s web earnings would have an effect on these funds beginning in July 2024.

Reinvest these tax credit in high quality index funds

Regardless of macro headwinds comparable to rising rates of interest and inflation, it’s important to place the payouts from these tax credit to work. The one method Canadians can lead a cushty life in retirement is by investing in inflation-beating belongings and benefiting from the facility of compounding.

One asset class that has persistently outpaced inflation is equities. For instance, the S&P 500 Index has returned over 10% yearly within the final 5 many years.

Whereas the payouts from the tax credit may not appear too giant at first, investing the advantages in low-cost index funds that observe the S&P 500 Index will help you create a retirement nest egg over time.

Given an annual charge of return of 10%, a $200 month-to-month funding would balloon to greater than $455,000 over 30 years. If you’ll be able to save $500 every month, your funding could be price $1.14 million after three many years, at 10%.

One low-cost index fund that tracks the S&P 500 is the Vanguard S&P 500 Index ETF (TSX:VSP). Investing in high quality index funds supplies diversification at a low value, which reduces funding dangers. It might sound enticing to put money into different subtle merchandise that intention to beat the broader markets. Nevertheless, you must perceive that greater than 80% of large-cap mutual funds fail to beat the benchmark index.

The highest holdings of the VSP ETF embrace tech giants comparable to Microsoft, Apple, Nvidia, Meta, Amazon, and Alphabet, which account for greater than 20% of the fund. Actually, the high-growth tech sector accounts for 30.5% of the VSP, adopted by healthcare at 12.8%, monetary companies at 12.65%, and client cyclical at 10.5%.

Whereas the VSP ETF might sound tech-heavy, it supplies publicity to among the largest corporations on this planet. Furthermore, the fund affords a dividend yield of 1%.