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Ottawa, July 2, 2002
2002-056

Goods and Services Tax Credit Becomes More Responsive to Changing Family Circumstances

John Manley, Deputy Prime Minister and Minister of Finance, confirmed today that the goods and services tax (GST) credit is more responsive to changing family circumstances starting July 2002.

This initiative makes 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.

Prior to this change GST credit payments were made to low- and modest-income Canadians based on information provided in the previous year’s income tax return. As a result, it may have taken 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.

As of this month the GST credit responds 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 receives an additional GST credit amount for that child in the next quarterly payment.

• The GST credit is 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, 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 residents to Canada are eligible for the credit in the next quarterly payment following their entry into Canada.

The GST credit responsiveness measure was confirmed in the 2001 budget and fulfills a 1999 budget commitment. The legislation implementing the measure received Royal Assent on March 27, 2002.

The GST credit helps low- and modest-income Canadians offset the costs of paying GST on their purchases. The amount of the GST credit depends on family size and income.

The credit amounts for the current benefit year (July 2002 to June 2003) are $213 per adult and $112 per child, with a supplement of up to $112 for single individuals and single parents. The net family income threshold, above which the credit begins to be phased out, is $27,749.

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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