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The goods and services tax/harmonized sales tax (GST/HST) credit is a tax-sheltered quarterly payment that enables low- and modest-income households to offset the indirect taxes they pay. Canadian residents are automatically considered for this non-refundable tax credit when they file taxes each year.
Who is eligible for the GST/HST tax credit in 2023?
An individual earning below $52,255 each year is eligible to apply for the GST/HST tax credit. For a single parent with two children, the annual earnings limit increases to $62,175, while for a married couple with three children, the adjusted family income should be below $65,595. Moreover, the recipient of this refund should be over the age of 19.
An individual will receive up to $496 as tax refunds for the 2022 base year. These payments will be received between July 2023 and June 2024. For married couples, this payment rises to $650, which increases by $171 for each child below the age of 19.
Invest these tax credits in quality growth stocks
Tax credits help several Canadian households to offset rising costs amid an inflationary environment in 2023. But you should also look to save a portion of these tax credits and invest the proceeds in quality growth stocks such as WSP Global (TSX:WSP).
Valued at $24 billion by market cap, WSP Global has returned 694% to shareholders in the last 10 years after adjusting for dividends. WSP is among the largest professional services companies globally and provides strategy advisory, engineering, and design services to public and private sector clients.
While strategic advisory services account for 45% of sales, the engineering & design business accounts for 55% of revenue. The Canadian company is involved in sectors such as transport and infrastructure, earth and environment, property and buildings, and industry and energy.
Between 2016 and 2022, WSP Global has increased sales by 87% while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) has more than tripled in this period.
WSP Global has also focused on acquisitions to drive sales higher in recent months. Its acquisition-based strategy allows WSP to provide clients with complementary solutions and benefit from cross-sell opportunities.
Moreover, its well-capitalized balance sheet provides WSP with the flexibility to further target accretive acquisitions and drive future cash flows higher. Its widening cash flows allow the company to pay shareholders an annual dividend of $1.50 per share, indicating a yield of 0.80%.
Priced at 24 times 2025 earnings, WSP stock trades at a discount of over 7% to consensus price target estimates.
Invest in index funds for steady returns
Alternatively, GST/HST tax credit recipients can consider investing in index funds, which diversifies their portfolio and reduces overall risk. Index funds that track indices such as the S&P 500 can help you gain exposure to the top 500 companies south of the border and enjoy inflation-beating returns over time.
The S&P 500 index has returned 10% annually to shareholders in the past five decades. An investment of $600 each year in an index fund that returns 10% annually will help you increase your portfolio value to almost $40,000 at the end of 20 years.
