Canada announces a temporary GST holiday

The federal government has announced plans to provide temporary goods and services tax/harmonized sales tax (GST/HST) relief on groceries and other holiday goods. Canadian businesses will be required to remove the GST/HST on a variety of qualifying products starting December 14, 2024 until February 15, 2025. For HST provinces (Ontario, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Prince Edward Island) the relief will provide even further savings.

The federal government announced plans to introduce legislation for this holiday GST/HST tax break on November 21, 2024. Given the implementation date is in just a few weeks, businesses will need to work quickly to update their systems to recognize the changes on December 14. These updates include identifying relevant products and updating their tax tables and systems. In addition, these changes require legislation to be passed in the Parliament next week, requiring at least one other party to vote with the Liberals for it to come into force. Businesses with large numbers of qualifying goods may need to begin work shortly to meet the implementation date.

What’s included? 

The relief would apply to goods delivered to purchasers and/or imported and paid for during the relief period. Qualifying goods include (subject to some exceptions):

• Prepared foods, including vegetable trays, pre-made meals and salads, and sandwiches

• Restaurant meals, whether dine-in, takeout, or delivery

• Snacks, including chips, candy, and granola bars

• Beer, wine, cider, and pre-mixed alcoholic beverages below 7 per cent ABV

• Children’s clothing and footwear, car seats, and diapers

• Children’s toys, such as board games, dolls, and video game consoles

• Books, print newspapers, and puzzles for all ages

• Christmas trees

How will the GST/HST relief affect your business? 

Businesses that sell qualifying goods will need to ensure they fully understand how this new measure will apply, especially since there are specific exceptions within the list of qualifying goods and short implementation dates with mid-month start and end periods. 

Given that the relief will apply to products and goods that are purchased in person, delivered, and imported, organizations at the national and international level will be impacted by the proposed relief. 

Administratively, businesses will need to update or implement temporary amendments to their point-of-sale systems and their e-commerce platforms to ensure that GST/HST is only temporarily removed on these qualifying goods during the relief period.  

While the relief measures are intended to help individual Canadians, this could place a burden on businesses to implement this temporary measure on short notice. Provincial governments (British Columbia, Saskatchewan, and Manitoba) haven’t yet indicated whether they will implement similar temporary measures for provincial sales tax purposes. Being well prepared ahead of the implementation date is essential for a smooth transition and to ensure your business will be adhering to the proposed legislative requirements. 

We understand that interpreting and applying these relief measures may be overwhelming—our sales tax specialists are here to help provide the necessary support and advice to businesses affected by the temporary relief measures.

Working Canadians Rebate

In addition to the GST/HST relief on qualifying goods, eligible Canadians will also receive a new Working Canadians Rebate. Canadians who worked in 2023 and earned up to $150,000 will receive $250 in early 2025. 

Have questions? Let’s talk. Contact your local advisor or reach out to us here.