Canada Revenue Agency: Did You Get the Extra $443 GST/HST Credit?

How to create a recurring revenue stream by investing in dividend stocks?

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The Canada Revenue Agency (CRA) issued an additional GST/HST credit payment in April to people already receiving this benefit. The one-time additional payment was calculated based on your 2018 tax return and aimed at helping residents during COVID-19.

What is the GST/HST credit?

According to the Canada Revenue Agency, the GST/HST credit is a non-taxable amount paid four times a year to individuals and families with low and modest incomes. This repayment helps to offset a part of the taxes they pay while purchasing goods and services.

You are eligible for the GST/HST credit if you’re a single person with a net annual income of below $47,527. In case you are a single parent or married with two children your net family income should not exceed $56,547.

The maximum one-time additional GST/HST payment will be $443 for single individuals. This figure will rise to $580 if you are married. Further, you would have received an additional $153 for each child under the age of 19. For the first eligible child of a single parent, the one-time credit is $290.

If you’re a married couple with one child, you would have received an extra $1,313 during the GST/HST payout in July.

Generate $450 per year without paying taxes to the CRA

The Canada Revenue Agency has disbursed billions of dollars in federal benefits to Canadians amid the pandemic. While the GST/HST extra credit is welcome, it will just provide temporary relief to residents. However, there is another way to generate $450 per year in tax-free income.

You can hold dividend stocks in your Tax-Free Savings Account (TFSA) and generate income that the CRA can’t tax. The TFSA contribution room for 2020 is $6,000; if you invest this amount in the Automotive Properties REIT (TSX:APR.UN), your annual dividend income will be $450, given the stock’s forward yield of a tasty 7.5%.

The REIT acquires automotive dealership properties in urban areas zoned for the use of automotive retail. It is a defensive asset class and automotive sales are an integral part of Canada’s total retail sales.

Automotive Properties sales rose 7.4% in Q3

Despite the ongoing pandemic, Automotive Properties has managed to grow sales at a stellar rate. In Q3, its rental revenue rose 7.4% to $18.6 million while sales were up 13.3% in the first nine months of 2020 at $56 million.

The REIT has a portfolio of 64 income-producing properties and one development property with a gross leasable area of 2.5 million square feet. It enters into long-term triple-net lease agreements with tenants, largely insulating the company from weak economic cycles.

The Canadian automotive dealership industry has grown at a steady pace. Retail sales have increased from $70 billion in 1999 to $165 billion in 2019, indicating an annual growth rate of 4.4%. However Canadian auto sales might fall by 30% in 2020, compared to last year due to COVID-19.

In order to tide over the current uncertainty, Automotive Properties is looking at preserving capital in the short-term instead of expanding its property portfolio.

Automotive Properties is just an example of a quality stock for your TFSA. You can identify similar dividend-paying companies to invest your money and benefit from consistent payouts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends AUTOMOTIVE PROPERTIES REIT. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

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