The equity markets have underperformed significantly in the last two years, making it extremely tough for investors. Interest rates are rising while company valuations across the board are falling off a cliff amid an inflationary environment. Moreover, an uncertain macro economy has made it quite tough to keep cash from flowing out.
However, the Canada Revenue Agency, or CRA, offers Canadian residents certain benefits, providing them with some much-needed breathing space. These three CRA benefits can be claimed by anyone who is a resident of Canada. Further, you can consider investing these savings in the stock market to enjoy outsized gains once the market sentiment improves.
Medical benefits
The CRA covers a wide list of medical items that are eligible for benefits or credits from the tax authority. It includes services such as dental care and ambulance, amounting to significant savings each year.
Make sure to comb through the CRA website to check the medical benefits that can be claimed by yourself, your spouse, and your dependents.
Go green
Several global economies, including Canada, aim to invest heavily in clean energy solutions to fight climate change. So, countries are providing households and businesses with incentives to accelerate the adoption of renewable energy products and services.
Canada provides The Canada Greener Homes Loan benefit, which offers homeowners interest-free financing to make their homes energy efficient.
A maximum of one loan is available per property and homeowner. The minimum amount is $5,000, with a maximum loan of $40,000. The maximum loan amount is calculated based on retrofits selected and capped based on industry standards.
Own an electric car
You will be eligible for another clean energy CRA benefit if you are buying an electric car. As part of Canada’s zero-emission program, people buying electric vehicles are eligible for subsidies.
For instance, if you purchase a battery-powered vehicle or longer-range plug-in hybrid, you may get up to $5,000 in government subsidies.
Invest savings in blue-chip stocks
Canadian investors can consider investing a portion of the benefits received from the CRA to buy shares of blue-chip TSX stocks such as GFL Environmental (TSX: GFL). Valued at $15 billion by market cap, GFL Environmental offers non-hazardous solid waste management and environmental services in North America.
GFL is part of a recession-resistant sector, allowing it to generate stable cash flows across market cycles. It also pays shareholders an annual dividend of $0.07 per share, translating to a forward yield of just 0.18%.
In the third quarter of 2023, the company reported revenue of $1.89 billion, an increase of 10.3% year over year after accounting for the impact of divestitures. Its adjusted earnings before interest, tax, depreciation, and amortization stood at $530.3 million, rising 12%, allowing GFL to end the quarter with a healthy margin of 28.1%.
GFL reported a free cash flow of $276 million and paid around $6.1 million in dividends, indicating a payout ratio of less than 3%. It is evident that GFL is investing heavily in capital expenditures, driving future cash flows higher.
Priced at 31.5 times forward earnings, GFL stock is not too expensive, given its forecast to expand earnings from $0.49 per share in 2022 to $1.27 per share in 2024.
