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Ottawa, September 5, 2001
2001-072

Goods and Services Tax/Harmonized Sales Tax Credit to Become More Responsive to Changing Family Circumstances

Finance Minister Paul Martin today confirmed that the federal government intends to make the goods and services tax/harmonized sales tax (GST/HST) credit more responsive to changing family circumstances as of July 2002.

This initiative will make the tax system fairer by reducing the amount of time it takes to adjust credit payments to reflect changes in a recipient’s family size or marital status.

Currently, GST/HST credit payments are based on information provided in the previous year’s income tax return. As a result, it may take as long as 18 months to adjust an individual’s credit amount to reflect changes in that individual’s family circumstances, such as the birth of a child.

Beginning in July 2002, the GST/HST credit will respond to changes in family circumstances in the quarter following that in which the change occurs, provided the necessary information is supplied to the Canada Customs and Revenue Agency with sufficient time to reflect the change.

Following are some examples:

• Following the birth of a child, a family will receive an additional GST/HST credit amount for that child included in the next quarterly payment.
• The GST/HST credit will be available to an individual in the next quarterly payment immediately following the individual’s 19^th birthday.
• Individuals who get married, or become separated or widowed, will have their credits adjusted in the quarter following their change in marital status to ensure that they receive the amount to which they are entitled.
• New or returning residents to Canada will be eligible for the credit in the next quarterly payment following their entry or return into Canada.

The GST/HST credit responsiveness measure was announced in the 1999 budget. Minister Martin confirmed that the proposed legislative amendments to the Income Tax Act will be introduced in the House of Commons at the earliest opportunity.

The GST/HST credit helps low- and modest-income Canadians offset the costs of paying GST/HST on their purchases. The amount of the GST/HST credit depends on family size and income. The basic credit amounts are currently $207 per adult and $109 per child, with a supplement of up to $109 for single individuals and single parents. The net family income threshold at which the credit begins to be phased out is $26,941.

As part of the federal government’s five-year $100-billion tax reduction plan, the credit amounts and the net family income threshold are fully indexed to ensure that the amounts that people receive keep pace with inflation.

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