The goods and services tax/harmonized sales tax (GST/HST) credit is a tax credit offered to low- and modest-income households in Canada. It is a tax-free quarterly payment that helps offset the GST or HST paid on goods and services.
You are eligible for the GST/HST credit if you are a Canadian resident over the age of 19. A Canadian resident earning below $52,255 annually is eligible to apply for the GST/HST tax credit. The annual earnings limit increases to $62,175 for a single parent with two children, and for a married couple with three children, the adjusted family income should be lower than $65,595.
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How much will you receive via the GS/HST tax credit in 2024
An individual is eligible to receive up to $496 in tax refunds. Moreover, the tax credit amount rises to $650 for married couples, while for every child below the age of 19, the payout is raised by an additional $171.
For the 2022 base year, the GST/HST tax credit will be distributed between July 2023 and June 2024. The last GST/HST tax credit distribution date was on January 5, 2024.
Invest tax credits in quality stocks
Tax credits are extremely helpful for Canadian households looking to offset rising costs amid higher interest rates and inflation. However, you can also consider saving a portion of these tax credits and reinvesting the proceeds in quality TSX stocks such as Constellation Software (TSX:CSU).
Valued at $75 billion by market cap, Constellation Software is among the largest companies on the TSX. It acquires, builds, and manages vertical market software businesses in Canada, the U.S., the U.K., and Europe.
Typically, Constellation Software acquires profitable software businesses that provide enterprise-facing mission-critical solutions. So, Constellation Software benefits from high customer and retention rates, resulting in a stable stream of recurring revenue.
The company increased sales by 23% year over year to $2.13 billion in the third quarter (Q3) of 2023, up from $1.72 billion in the year-ago period. While the majority of its growth was driven by acquisitions, organic growth stood at 8% in Q3.
Due to an asset-light model and high operating leverage, net income growth was higher at 30%, or $177 million, up from $136 million in the year-ago period.
Constellation Software completed the acquisition of the Optimal Blue business from Intercontinental Exchange for $201 million in cash and a promissory note payable of $500 million. The TSX giant completed several other acquisitions for $187 million in cash in the September quarter.
Its operating cash flow in Q3 stood at $513 million, 60% higher than the year-ago period. Its free cash flow also rose by 60% to $367 million, indicating a healthy margin of 17.2%.
Constellation Software’s widening profit margins and cash flows allow the company to pay shareholders an annual dividend of $5.35 per share, translating to a yield of just 0.15%. However, these payouts have risen by more than 11% annually in the last 15 years. With a payout ratio of less than 10%, CSU has enough room to grow via acquisitions and increase dividends going forward.
Priced at 33.7 times forward earnings, CSU stock is quite cheap, given it is forecast to increase earnings per share by almost 40% annually in the next five years.
