Do you find that, after taxes, your paycheck is barely enough to cover your essential costs? Well, you might be eligible for a government initiative designed to provide low and middle-income households with some much-needed financial relief.
It is known as a solidarity tax credit and, essentially, levies solidarity taxes for low earners that could benefit from a helping hand with their finances.
In this guide, we’ll outline what a solidarity tax credit is, what the components of a solidarity tax credit are and how to find out if you’re eligible for a solidarity tax credit.
What is a solidarity tax credit?
A solidarity tax credit is a refundable tax credit provided to low-income earners to help them offset a portion of income tax owed.
The amount refunded is based on your financial situation during a certain qualifying period and can help cover the cost of day-to-day expenses.
But how does a solidarity tax credit work?
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What are the components of a solidarity tax credit?
Before you apply for a solidarity tax credit, you must understand the different components and what they mean. There are three components to a solidarity tax credit:
The QST component
The QST component is designed to offset the financial burden of the Quebec Sales Tax (QST) on eligible residents.
This component includes a basic amount for families but, if you live alone or with someone under the age of 18, you may be eligible for further financial support in the form of an additional payment.
The housing component
The housing component is designed to help homeowners, tenants and subtenants of eligible dwellings.
This component can only be provided to homeowners if their roll number or cadastral designation is noted on their municipal tax bill.
The individuals living in northern villages component
The individuals living in northern villages component is designed to help cover the higher cost of living for residents living in a select number of northern locations.
This component is for residents of the following northern villages:
How is a solidarity tax credit calculated?
The amount of solidarity tax credit you will receive depends on your financial situation on a certain date.
For example, the amount of solidarity tax credit for the payment period from July 2022 to June 2023 is based on your financial situation on December 31, 2021.
This is then calculated by adding the separate amounts you are entitled to under the different components with the total amount rewarded potentially reduced depending on your maximum family income.
How is a solidarity tax credit paid?
The way a solidarity tax credit is paid depends on how much you are eligible for.
For example, if you are eligible for $240 or less, your solidarity tax credit will be paid in a single lump sum.
If you are eligible for more than $240 but less than $800, your solidarity tax credit will be paid in quarterly instalments.
Finally, if you are eligible for more than $800, your solidarity tax credit will be paid in monthly instalments over a 12-month period.
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Am I eligible for a solidarity tax credit?
To be eligible for a solidarity tax credit for the period from July to June, you must have filed your income tax return and met the following requirements on December 31 of the previous year:
- You were 18 or older
- You were under 18 but had a spouse, were the parent of a child that lived with you or were recognized as an emancipated minor by a competent authority (e.g. court)
- You were a resident of Quebec
- You or your spouse were a Canadian citizen, a permanent resident, a protected person under the Immigration and Refugee Act or a temporary resident under the Immigration and Refugee Act that had been living in Canada for at least 18 months
However, you may not be eligible to claim the solidarity tax credit if the following requirements apply to you:
- You were confined to prison on December 31, 2021, for one or more periods of more than 183 days
- Someone recieved a family allowance payment from Retraite Quebec concerning you for December 2021 (unless you turned 18 that month)
How do I apply for a solidarity tax credit?
The process of applying for a solidarity tax credit is relatively simple and straightforward if you meet the eligibility criteria.
These are the steps you can expect when you apply for a solidarity tax credit:
Register for direct deposit
Before you can apply for a solidarity tax credit, you must register for direct deposit.
This is a fast and secure way for the government to deposit money directly into your personal bank account and can be done through your financial institution.
File Schedule D
Once you have registered for direct deposit, you must file Schedule D of your income tax return.
This is the only way to ensure you are paid the total amount of solidarity credit you are entitled to under each component.
If you are eligible for a solidarity tax credit but fail to complete Schedule D, you will receive the basic amount and the spousal amount, if necessary, of the QST component.
If you had a spouse that lived with you on the qualifying date, only one of you can file Schedule D to receive a solidarity tax credit for both of you.
However, if you had a spouse but they didn’t live with you on the qualifying date, both of you must file Schedule D separately.
Failure to file Schedule D on time might result in you experiencing a wait for your first payment.
Notice of determination
If you have registered for direct deposit and filed Schedule D, you will receive a formal letter, known as a notice of determination, from the government informing you of whether or not you are entitled to a solidarity tax credit.
This form will outline how much solidarity tax credit you can expect to receive as well as how the total amount was calculated.