A GST/HST holiday: what you need to know
The federal government has announced a GST/HST holiday from December 14, 2024, to February 15, 2025. This temporary measure will exempt the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) from a variety of essential items.
It is important to note that the GST/HST Holiday bill has not passed, but is expected to on November 28th.
Here’s what business owners need to know:
Key items exempted from GST:
- Prepared foods and snacks: Vegetable trays, pre-made meals, salads, sandwiches, chips, candy, granola bars, etc.
- Dining and beverages: Restaurant meals (dine-in, takeout, or delivery), and beer, wine, cider, and pre-mixed alcoholic beverages (less than 7% alcohol by volume).
- Children's products: Children's clothing, footwear, car seats, diapers, and other important family items.
- Toys and entertainment: Children's toys (board games, dolls, video game consoles, etc.) and books, print newspapers, and puzzles for all ages.
- Seasonal items: Christmas trees and other holiday items.
For more information and a complete list of items, please visit the government’s website.
Economic impact and CFIB's stance:
CFIB conducted a flash member survey from November 26th-November 27th. Results found only 4% of small businesses expect stronger sales as a result of the holiday. The majority of small businesses are opposed to the measure, including 62% of respondents that will be required to implement it.
Many business owners will face added confusion and administrative burdens as they navigate complex exemption lists and reprogram their systems twice in a two-month period.
You can view CFIB’s press release on the survey results here.
CFIB is calling on the government to provide affected small firms with a minimum $1000 credit in their GST/HST accounts to cover administrative and programming costs, and to order the CRA to forgive the taxes owed, penalties and interests for any good faith errors small firms make to implement the GST/HST holiday.
Here are our answers to some frequently asked questions to help you navigate this change:
What is the GST Holiday?
The GST Holiday is a temporary measure announced by the Canadian federal government, exempting the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) on specific items from December 14, 2024, to February 15, 2025.
Which products are eligible for the GST exemption?
Eligible items include prepared foods (e.g., vegetable trays, pre-made meals), restaurant meals, snacks, children's clothing and footwear, children’s toys, books, print newspapers, and Christmas trees, among others. Please visit the government's website for a complete list.
How does this impact my business if I sell these products?
As a business selling eligible items, you will not charge GST/HST on these products during the holiday period, potentially increasing customer sales due to reduced costs.
Do I need to adjust my point-of-sale (POS) systems?
Yes, ensure that your POS system reflects the temporary GST/HST exemption to avoid inadvertently charging tax on eligible items. Consult your software provider for assistance if necessary.
Does this apply to just retail sales, or wholesale and manufacturer sales too?
Yes, this applies to retail sales, wholesale, and manufacturer sales as well.
Do I still get full ITCs (my GST back) on purchases of inventory I am selling during the tax exemption?
Yes, you can still get your full GST ITCs back on purchases of inventory during the tax exemption.
How are Hobby Stores affected by the GST Holiday?
Administrative Adjustments:
Implementing the GST exemption may require hobby stores to update their pricing systems and sales processes, leading to additional administrative efforts.
Limited Scope of Exemptions:
Not all hobby-related products are covered by the GST holiday. While children's toys are included, items like specific sports equipment or hobby supplies might not qualify, which could limit the overall impact on sales.
Does the GST holiday apply to wine tastings and food tastings?
Wine tastings: ALL wine is included in the GST Holiday.
Ready Made Cocktails/Beverages: Those with alcohol by volume (ABV) of up to 7% are included.
Food tastings: Prepared foods such as salads, sandwiches, and assorted platters are included in the holiday exemption.
How should I communicate this change to my customers?
Inform customers through signage, digital communications, and prepare staff with briefings.
Do I need to file any special paperwork with the CRA?
Generally, there’s no extra paperwork for GST-exempt sales. However, ensure your sales records reflect the exemption for audit purposes.
What if I mistakenly charge GST during the holiday?
If GST is mistakenly charged, you may need to issue refunds to customers. Ensure that your accounting and sales records are corrected promptly.
Will services also be exempt from the GST during this period?
The exemption applies primarily to physical goods. Services are typically not included unless specified by the government announcement.
How can businesses benefit from the GST Holiday?
By promoting GST-exempt products, businesses can attract more customers, potentially increase sales, and enhance customer satisfaction by offering value during the shopping season.
Who can I contact for more information or assistance?
For specific guidance, reach out to the Canada Revenue Agency (CRA) or call CFIB Business Resources to help navigate the GST Holiday efficiently.
Will there be compensation offered to businesses who must dedicate time and money for updating their POS systems and inventory control software?
Currently, there is no specific compensation offered to businesses for the efforts and costs involved in updating their POS systems and inventory control software for the GST holiday. Here are the key points related to this situation:
Administrative burden:
Updating POS systems to accommodate tax exemptions on qualifying goods during the GST holiday is largely the responsibility of retailers. This includes setting up systems to handle tax-exempt sales correctly.
Implementation challenges:
Businesses must quickly update their systems within a short timeframe (about three weeks before the holiday period begins), which can pose challenges, especially for those with extensive inventories.
Support from POS providers:
Some POS providers indicate that if their software allows tax rate adjustments for items, the updates might be straightforward. However, smaller businesses may encounter more significant hurdles due to limited resources.
If your question is not addressed here, please reach out to our Business Advisors by calling 1-833-568-2342 or by filling out our contact form here. We will also update this page as more information becomes available.
Learn more about our recent efforts on this topic:
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