The pandemic has been a financial disaster for everyone. From companies with billions in assets and cash reserves to individuals who barely had any nest eggs tucked away, everyone felt the pandemic’s wrath. The government of Canada and the CRA took a lot of measures to ease the burden from individuals and businesses that lost income due to the pandemic.
That doesn’t mean that the CRA doesn’t help Canadians out on a regular basis. It offers other benefits as well, designed specifically to help families and individuals with lower income. This year, because of the extra financial burden, the CRA beefed up one of the usual benefits. If you haven’t already, you might be able to receive $850, tax-free, with one easy trick.
The trick
The GST/HST credit is given out every year. If you are single, you can receive up to $451, divided into four quarterly installments. If you are married or living with a common-law partner, you get up to $592 in this credit. That’s the usual payout for families (and individuals) with net income under $38,500 ($38,000 for individuals). But this year, the government has issued an extra payout that can reach up to $400.
If you are eligible, and you haven’t received this credit yet, you might not have filed your 2018 tax returns. And that’s the easy trick. You have to file your 2018 taxes, and you may be eligible for the retroactive GST/HST credit. The actual tax credit that you might be eligible for is paid in quarterly installments, but the additional amount will likely come in a single installment.
Using the funds
There are many domestic expenses that you can put this money towards. But if you’ve already met your usual expenses and are planning to save the extra amount, a smart move would be to invest it. Even if you receive just $300, you can invest in a decent growth and dividend stock like Killam Apartment REIT (TSX: KMP.UN). It was a decent growth stock and a consistent dividend payer.
It’s currently trading at a discounted price of $17 per share, down 26% from its pre-pandemic high. Still, if it can manage to sustain its 10-year CAGR (dividend adjusted) of 11% for a couple of decades, you may have a modest nest egg of $2,400 that you can put to better use. It’s not much, but a few small nest eggs like this that you can just put in your TFSA and forget about can be a powerful help in another financial crisis.
Foolish takeaway
Having a few nest eggs is necessary, because the CRA might not come through every time. If you make a habit of setting aside a small sum and investing it in a decent growth stock, you can build enough savings to help you through, without the need for the GST/HST credit (though you should get it if you are eligible).
Even investing $50 in safe growth stocks each month can help you a lot in the long run, especially if you keep investing regularly for over a decade.
