GST/HST “Holiday”: Temporary Tax Relief on Select Essentials
On November 21, 2024, the Government of Canada announced a temporary Goods and Services Tax/Harmonized Sales Tax (GST/HST) relief on select holiday essentials. This measure applies from December 14, 2024, to February 15, 2025, offering temporary support to Canadians by removing GST/HST on specific categories of goods and services.
Qualifiying Items
The GST/HST relief applies to the following categories:
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Food and Beverages
- Groceries: All grocery items, including pantry staples (e.g., flour, sugar, pasta), fresh produce, dairy, and meat products.
- Prepared Foods: Pre-made meals, salads, sandwiches, vegetable and fruit trays, and deli platters.
- Restaurant Meals: Includes all food and beverages served at restaurants, whether dine-in, takeout, or delivery.
- Snacks: Items such as chips, chocolate bars, candy, nuts, and granola bars.
- Alcoholic Beverages: Drinks with less than 7% alcohol by volume, such as beer, wine, cider, and ready-to-drink cocktails
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Children’s Products
- Clothing and Footwear: All items specifically designed for children.
- Diapers and Accessories: Including disposable and cloth diapers, training pants, and diaper bags.
- Toys and Games: Includes board games, video game consoles, dolls, action figures, puzzles, and educational toys intended for children under 14.
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Books and Printed Media
- Books: Physical books, excluding audiobooks and e-books.
- Newspapers: Printed versions of newspapers available for purchase.
- Puzzles: Jigsaw puzzles for children and adults alike.
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Holiday Decorations
- Christmas Trees: Both natural and artificial Christmas trees.
- Seasonal Decor: Wreaths, garlands, and other traditional decorations.
Implementation Details
- System Adjustments: Businesses must ensure their point-of-sale systems are updated to automatically remove GST/HST for qualifying items during the specified relief period.
- Invoices and Receipts: GST/HST should not appear on invoices for qualifying items. Businesses should clearly indicate that the tax has been waived for eligible products.
- Reporting: Standard GST/HST reporting and remittance procedures remain in effect. Businesses must exclude the value of GST/HST-exempt transactions from their taxable supplies.
Responsibilities of Businesses
Businesses must ensure compliance with the GST/HST relief by:
1. Identifying Eligible Items
Confirm which goods and services qualify for the tax break. The Canada Revenue Agency (CRA) has provided a comprehensive list to guide businesses.
2. Updating Systems
Adjust point-of-sale and accounting systems to reflect the tax exemption during the relief period.
3. Employee Training
Inform staff about the qualifying items and updated processes to ensure consistency in applying the relief.
4. Monitoring for Regulatory Updates
Stay informed of any regulatory changes or clarifications issued by the CRA during the relief period. This ensures ongoing compliance with the latest requirements.
5. Audit Preparedness:
Maintain detailed records of exempt transactions, including item descriptions and sales amounts, to support compliance reviews by CRA.
Guidance for Restaurants and Eating & Drinking Establishments
The GST/HST “holiday” extends to all food and non-alcoholic beverages served at restaurants, cafes, and bars. Key considerations for businesses in this sector include:
- Eligible Items: GST/HST must be removed from all menu items, including prepared foods, non-alcoholic beverages, and qualifying alcoholic beverages (under 7% ABV).
- Excluded Items: Alcoholic beverages exceeding 7% ABV remain taxable. Mixed orders containing both taxable and exempt items must accurately reflect the tax relief for only the qualifying components.
- Delivery and Takeout Orders: Ensure that online ordering systems are updated to automatically exclude GST/HST for qualifying items during the relief period.
- Mandatory Gratuities and Service Charges: These remain subject to GST/HST and should not be adjusted under this tax break.
Resources for Futher Guidance
For detailed information about qualifying items, implementation requirements, and compliance support, refer to the official release from the Government of Canada: GST/HST Tax Break
