CRA: Will You Receive a Grocery Rebate in 2024?

The grocery rebate was introduced as a one-time tax credit for low-income Canadian households to offset higher prices.

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Last July, the Canada Revenue Agency (CRA) introduced the grocery rebate, a one-time tax credit. The rebate helped millions of households offset the rising cost of groceries, which has spiked in the last two years. According to a report from Statistics Canada, grocery prices rose more than 9% year over year as of April 2023.

The grocery rebate was available to individuals with incomes of less than $32,000 or to households with incomes of less than $38,000. According to the CRA, around 11 million Canadians were eligible to receive the payment.

To qualify for the rebate, individuals should have filed a tax return for 2021. Further, the CRA emphasized households or individuals who received the GST/HST tax credit can expect to receive the grocery rebate too.

Single individuals with no children would receive $234, while those with two children would receive $467. While inflation remains elevated, there is no announcement by the CRA to provide a similar rebate in 2024.

How do you navigate an inflationary environment?

Similar to other central banks, the Bank of Canada has hiked interest rates significantly in the last two years to offset inflation. A higher cost of debt and steep inflation have meant consumers now have less to spend. In fact, the household savings rate in Canada has fallen from 9.3% in the third quarter (Q3) of 2021 to 6.2% in Q4 of 2023.

During periods of inflation, it makes sense to lower discretionary expenses such as dining and travel. It’s also essential to limit your credit card debt and make regular payments to avoid interest charges on these expenditures.

You need to create a nest egg

Historically, a combination of higher interest rates and inflation has translated to lower corporate earnings, resulting in industry-wide layoffs and economic recessions. While the Canadian economy is still resilient, it is exposed to macro headwinds, including geopolitical tensions.

To survive an economic downturn, Canadian individuals and households need to focus on creating a nest egg that will offer them liquidity during recessions.

One way to consistently boost your savings is by investing in exchange-traded funds, or ETFs, that track broader indices such as the S&P 500. In the last 50 years, the S&P 500 index has returned over 10% annually after adjusting for dividend reinvestments, creating significant wealth for long-term investors.

You can gain exposure to the S&P 500 index by investing in a low-cost index fund such as Vanguard S&P 500 Index ETF (TSX:VSP). The Canadian ETF is hedged to the CAD, shielding you from fluctuations in foreign exchange rates. Further, it offers you exposure to some of the largest companies in the world, such as Microsoft, Apple, and Nvidia.

While the S&P 500 trades near all-time highs, the popular index should deliver inflation-beating returns over time due to the consistent expansion of corporate earnings and rising gross domestic product numbers. Given annual returns of 10%, an investment of $500 every month will help you increase your portfolio size to over $665,000 over 25 years.

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.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

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