GST Increase News for 2025 in Canada: What’s True? Check Payment Updates

GST Increase News for 2025 in Canada: As Canadians prepare for 2025, the Goods and Services Tax (GST) remains a focal point of discussion. While rumors of a GST rate increase have circulated, the federal government has confirmed that the GST rate will remain steady at 5% . However, significant updates to the GST/HST credit are set to provide financial relief to low- and moderate-income households. These adjustments, driven by inflation and economic pressures, aim to ensure that vulnerable populations can cope with rising living costs.

In this article, we’ll explore the nuances of these changes, provide actionable tips to maximize your benefits, and offer a comprehensive look at how the GST system works in Canada.

Key Details of GST and GST/HST Credit Updates for 2025

Here’s a quick summary of the essential information:

What is GST and Why Does It Matter?

The Goods and Services Tax (GST) is a federal tax levied at a flat rate of 5% on most goods and services in Canada. Combined with provincial sales taxes (PST) or harmonized sales taxes (HST), it generates revenue to fund essential public services like healthcare, education, and infrastructure development.

Also Read: Best Careers to Start in Canada in 2025: Charting Your Path to Success

To offset the financial burden of GST/HST on low- and moderate-income households, the Canadian government introduced the GST/HST credit , a quarterly, tax-free payment designed to promote equity and reduce economic disparities.

Historical Context of GST

Introduced in 1991, the GST replaced the federal manufacturers’ sales tax, creating a fairer and more uniform taxation system. Over time, some provinces adopted the Harmonized Sales Tax (HST) , which combines federal and provincial taxes into a single rate. For example:

• Ontario: 13% HST
• Nova Scotia: 15% HST

Despite periodic debates about increasing the GST rate, the current 5% rate has remained unchanged since 2008, providing stability for consumers and businesses alike.

No GST Rate Increase in 2025

Contrary to speculation, Canada’s GST rate will remain at 5% in 2025 . This decision ensures predictable financial planning for both consumers and businesses. However, the GST/HST credit amounts have been adjusted for inflation , offering increased support to eligible individuals and families.

Updated GST/HST Credit Amounts (2024–2025):

• Single individuals: Up to $519 annually
• Married or common-law couples: Up to $680 annually
• Each child under 19: Additional $179 annually

For example, a single parent with two children could receive:

• Base credit: $519
• Per child: $179 x 2 = $358
• Total annual credit: $877 ($219.25 per quarterly payment)

How to Apply for the GST/HST Credit

There is no separate application process for the GST/HST credit. Eligibility is assessed automatically when you file your annual tax return. To qualify, you must:

1. Be a Canadian resident for tax purposes.
2. Be at least 19 years old, have a spouse/common-law partner, or be a parent.
3. File your 2023 tax return, even if you had no income.

The credit amount is calculated based on your adjusted family net income from your most recent tax return, ensuring benefits are distributed equitably.

Also Read: CRA Releases $2,254 OAS Payment for 2024: Eligibility & How to Apply

2025 Payment Schedule

GST/HST credits are distributed quarterly on the following dates:

• January 3, 2025
• April 4, 2025
• July 4, 2025
• October 3, 2025

Payments are deposited directly into recipients’ bank accounts or sent via cheque for those not enrolled in direct deposit. Staying informed about these dates can help you plan your budget effectively.

Steps to Maximize Your GST/HST Credit

1. File Your Tax Return Promptly Ensure you file your 2023 tax return on time to avoid delays or ineligibility.
2. Review Your Personal Information Double-check details like marital status, dependents, and income to prevent errors that could affect your credit amount.
3. Enroll in Direct Deposit Direct deposit ensures faster and more secure payments. Update your banking information with the CRA if needed.
4. Stay Informed Monitor government updates regarding GST/HST credit changes. Knowledge of policy adjustments can help you adapt quickly.
5. Budget Wisely Incorporate GST/HST credits into your financial planning to manage essential expenses effectively.

Addressing Payment Delays

Occasionally, payments may be delayed due to administrative issues or outdated personal information. To avoid disruptions:

• Keep your address, marital status, and banking details current in the CRA’s system.
• Use the CRA’s My Account portal to verify your payment status and eligibility.

If discrepancies arise, contact the CRA promptly to resolve them.

Comparison with Global VAT Systems

Canada’s 5% GST rate is among the lowest globally. For context:

• UK: 20% VAT
• Australia: 10% GST
• Germany: 19% VAT

While higher rates generate more revenue, they also impose greater financial burdens on consumers. Canada’s lower rate strikes a balance, fostering economic growth while maintaining affordability.

Also Read: December 2024 OAS Payment: A $2,455 Boost for Canadian Seniors

Conclusion

While there will be no GST rate increase in 2025 , the adjustments to the GST/HST credit reflect Canada’s commitment to supporting low- and moderate-income households amid rising living costs. By understanding these updates and taking proactive steps—such as filing your tax return on time and enrolling in direct deposit—you can maximize your benefits and navigate Canada’s tax landscape with confidence.