On November 21, 2024, the Department of Finance announced temporary GST/HST relief on certain holiday essentials from December 14, 2024 to February 15, 2025. Many businesses, including retail stores and restaurants, will quickly need to review their product lists and make adjustments to their POS systems, all during the busy holiday shopping season.
What goods will qualify for the proposed tax relief?
The following are categories of proposed qualifying goods (see here for the full list and detailed descriptions).
- Children’s clothing
- Children’s footwear
- Children’s diapers
- Children’s car seats
- Print newspapers
- Printed books (some exceptions)
- Christmas trees or similar decorative trees, whether natural or artificial
- Alcoholic beverages (excluding spirits but including wine, beer, ciders, and spirit coolers up to 7 per cent ABV)
- Pop, candy, chips, ice cream, cakes, pastries, pudding, etc.
- Prepared salads, sandwiches, platters of cheese, cold cuts, fruit or vegetables, and other arrangements of prepared food
- Food and beverages sold by a restaurant, coffee shop, take-out outlet, pub, food truck, etc.
- Select children’s toys (several conditions)
- Jigsaw puzzles
- Video-game consoles, controllers or physical game media (e.g., a video-game cartridge or disc).
What’s next?
While this is welcome news to consumers, there are still many outstanding tax issues that businesses will need to monitor. How will this tax holiday be implemented (e.g., zero-rated supply, exempt supply, or something else)? How will input tax credit claims and cash flow be impacted? Is this the final list or will there be goods added or removed by the time legislation is passed? Will the GST/HST relief only apply to retail sales or all sales of qualifying goods? Does a particular product fit into the description of a qualifying good or is there ambiguity? Can similar announcements be expected from the PST/QST provinces?
If your business is affected by this temporary GST/HST measure, members of the Miller Thomson LLP Sales, Commodity and Indirect Tax Group are available to discuss. Hopefully draft legislation is released (and passed) well before the December 14, 2024 effective date.
