A Happy GST/HST Holiday for All Those Who Celebrate

The federal government has created a new “GST holiday” this season. Through Bill C-78, the Tax Break for All Canadians Act, the federal government plans to enact, for the first time, a temporary goods and services tax and harmonized sales tax (GST/HST) holiday aimed at traditional “holiday essentials” to ease financial burdens during the holiday season and into early 2025.

If passed, the legislation will enact a new temporary zero-rating rule (GST/HST at a 0% rate) under the Excise Tax Act (Canada), and will come into force on December 14, 2024. To date, the Bill has passed three readings in the House of Commons but has not yet been approved by the Senate. It is anticipated to pass in the Senate later this week.

When Will the Tax Relief Apply? 

The GST/HST holiday will be implemented by temporarily zero-rating select goods and services purchased during the eligible period of December 14, 2024, to February 15, 2025. This means that retail customers may be provided point-of-sale tax relief. The zero-rating also applies to wholesale sales and importations of qualifying goods into Canada.

To qualify as an eligible supply and benefit from the tax holiday:

1. All the consideration for the supply must be paid during the eligible period, and
2. The goods must be delivered or made available to the customer within the eligible period.

What Are the Eligible Items?

Only specific goods and services qualify for the GST/HST relief. The government has provided a helpful interactive site that describes the various goods and services in detail, with examples.

A summary of the eligible goods includes the following:

1. Food and non-alcoholic beverages, including restaurant and takeout meals as well as snack foods
2. Alcoholic beverages, including beer, malt beverages, wine, sake, fortified wine or sake, subject to exclusions for higher alcohol products
3. Catering services
4. Various children’s products, including children’s car seats, children’s diapers, children’s clothing and children’s footwear (all as defined in the Deduction for Provincial Rebate (GST/HST) Regulations)
5. Various games and toys designed for learning or play by a child under 14 years of age
6. Jigsaw puzzles and video games for all ages
7. Printed books, religious scriptures and audio recordings of books. Note that magazines, books designed primarily for writing on (e.g., activity book), colouring books or printed books sold with other media remain taxable)
8. Newspapers (but not news magazines)
9. Christmas trees (natural or artificial) or similar decorative trees

What About Provincial Taxes? 

The GST/HST relief noted above will apply to both GST and HST. At present, there has been no similar relief announced for provincial sales taxes (PST), such as PST that applies on sales in British Columbia, Manitoba and Saskatchewan and QST for sales made in Quebec.

Effect on Businesses

There is a short runway for businesses to implement the necessary changes to their point-of-sale systems and any other relevant software to stop charging tax during the temporary relief period. If a person believes that tax was charged improperly, they can make a claim directly to the government for a rebate for taxes paid in error within two years of the date of payment.

For more information, contact the authors or any other member of our Tax group.