A GST/HST Holiday:
What You Need To Know

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.

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.

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.

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.

Yes, this applies to retail sales, wholesale, and manufacturer sales as well.

Yes, you can still get your full GST ITCs back on purchases of inventory during the tax exemption.

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.

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.

The provision of wine is relieved of GST/HST during the eligible period. The provision of food is relieved of GST/HST during the eligible period. There may be circumstances where there is a fee for food/wine tasting which includes the provision of other benefits which would not qualify for GST/HST relief. In these cases where there is a single supply of elements with some of the elements being subject to GST/HST relief and some not, it is necessary to determine the essential nature of what is being supplied and that will dictate whether GST/HST relief applies or doesn’t.

Example #1

A winery holds a wine and food tasting event that charges a fee, and, for the fee, the customer receives samples of different types of wine, samples of food and some non-food or non-beverages benefits that are of nominal value (such as a souvenir wine glass). The nature of the supply is a supply of a service of food and eligible beverages even though it includes other benefits of nominal value. The supply is subject to the GST/HST relief during the eligible period.

Example #2

A restaurant holds a function at their location and the fee provides a set prepared meal, a set glass of wine and includes a shot of whiskey all supplied as a single supply. Only the provision of food and beverage is supplied and nothing else. The nature of the supply is a supply of a service of food and eligible beverages even though it might include the provision of a non-qualifying service (the provision of the shot of whiskey). The supply is subject to the GST/HST relief during the eligible period.

Example #3

A bar has a whiskey tasting event and for a set fee provides the customer with samples of different types of whiskey. The bar also has a tray of cheeses that customers can eat while they are tasting the various whiskeys. The nature of the supply is a supply of a non-qualifying service (whiskey is not an eligible beverage) even though some incidental food is provided. The supply is not relieved of GST/HST during the eligible period.

Example #4

A venue holds a concert for a professional performer and charges a flat fee that provides the customer with entrance to the event plus some complimentary food and beverages. Customers attend the event for the purpose of the concert and not the complimentary food and beverages. The nature of the supply is a supply of a non-qualifying service (access to a concert) even though some incidental food is provided. The supply is not relieved of GST/HST during the eligible period.

Inform customers through signage, digital communications, and prepare staff with briefings.

Generally, there’s no extra paperwork for GST-exempt sales. However, ensure your sales records reflect the exemption for audit purposes.

If GST is mistakenly charged, you may need to issue refunds to customers. Ensure that your accounting and sales records are corrected promptly.

The exemption applies primarily to physical goods. Services are typically not included unless specified by the government announcement.

By promoting GST-exempt products, businesses can attract more customers, potentially increase sales, and enhance customer satisfaction by offering value during the shopping season.

For specific guidance, reach out to the Canada Revenue Agency (CRA) or call CFIB Business Resources to help navigate the GST Holiday efficiently.

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.

In the context of a model plane, this is relieved of GST/HST during the eligible period under the provision of the legislation that zero-rates:

• a product designed for use by a child under 14 years of age in learning or play that is a toy, toy set or toy system that involves:
  1. building, creating or assembling structures, objects or models by using pieces, parts, materials or modelling compound, or
  2. sorting, stacking or organizing pieces, parts or materials.

A model plane, that is designed for use by a child under 14 years of age, would qualify as a model and it is therefore subject to GST/HST relief during the period. If the model plane is sold as one bundled kit for one price that includes other accessories within the kit such as paint or glue, the entire kit is relieved of GST/HST. However, if paint or glue are sold separately, such items do not qualify for the relief.

The GST/HST relief for toys including games, dolls and toy sets such as models that are aimed at children under 14 years or age and where the toy is for learning or play purposes. It’s a question of fact whether a particular item meets this requirement or not.

This can be evidenced by the marketing of the product on the manufacturer’s packaging. If an item is specifically marketed for adults, such items would not qualify.

Where a product is marketed, for example, for ages 8 and up, it would qualify. Where such items are not specifically marketed to adults and the item can, by its nature, be an item that could be used by a child under 14 years of age for learning or play purposes, the item will qualify for GST/HST relief. The rules are based on the nature of the product and not the specific retail customer.

If an item, based on the packaging and the nature of the item is such that it is an adult toy, for example marked as for 18 years and older, it doesn’t matter if the customer is purchasing it for the use by a child under 14 years of age, it will not qualify.

Similarly, if an item is not specifically marketed to adults and the item can, by its nature, be used by a child under 14 years of age for learning or play purposes, the item will qualify even if the customer is purchasing it for the use by an adult.

These food and beverage related items would also temporarily have no GST/HST charged:
Restaurant meals, whether dine-in, takeout, or delivery (including meals at cafés, pubs, food trucks, and other food and beverage establishments).

The CRA will take a practical approach to compliance. They will dedicate their efforts towards situations in which businesses willfully and egregiously refuse to comply with the temporary measures, such as those who collect GST/HST but do not remit it to the CRA. Businesses who make reasonable efforts to comply with the legislation will not be the focus of their compliance actions.

These items, as they have dietary supplements and added protein in them, would fall under the Dietary Supplement category and therefore are NOT part of the GST Holiday.

Based on how CRA has interpreted the expression "printed book" which may contain printed words, printed pictures, diagrams, symbols, or other visual aids, including music and Braille, “sheet music”, as the term is commonly understood, would be considered printed books and would qualify for temporary GST/HST relief. However, please note that if the music is printed on sheets of paper, not bound or fastened, they would NOT be considered to be printed books, unless they are unbound versions of scripture of any religion.

A structured card game with a structured set of goals and rules that is played that uses physical pieces is subject to the GST/HST relief if the game is designed for the use by a child under 14 years of age. The marketing of the game would give indication as to whether the game is marketed to a child under 14 years of age or towards other teenagers or adults. The treatment of accessories will depend on the nature of the accessory. Dice are relieved of the GST/HST as are accessories that are replacement, refills or supplementary components of a qualifying game. 

The date that a booking is made is not relevant to the application of GST/HST relief. If the food service is rendered to the customer (i.e. the prepared food is provided to the recipient) during the eligible period and the payment takes place during the eligible period, the service will be subject to the relief.

The GST/HST relief is for Christmas trees or a similar decorative tree, natural or artificial. There is no size limit. Tabletop decorations that are in the form of a decorative tree would qualify. Other holiday decorations do not qualify.

The CRA’s pre-existing position applied to gift baskets that contain food is based on the value of the contents. If 90% or more of the basket’s value comes from zero-rated items (e.g., fruits), the supply is zero-rated. When the value of the component parts, each of which is taxable, exceeds 10% of the total value of the supply, the supply of the gift basket is taxable. During the eligible period, qualifying goods like food and non-alcoholic beverages are included in the zero-rated category, potentially allowing more gift baskets to qualify for zero-rated treatment. 

It is up to the business to determine the acceptance of any product based on their practice and policies. If a business accepts the return of a product, they can choose not to refund or credit the customer the GST/HST that was previously paid. More information regarding how a registrant is to treat returns or adjustments can be found here: General Information for GST/HST Registrants - Canada.ca.

Where a consumer was not reimbursed an amount of GST/HST by a supplier who accepted a return, the consumer may within 2 years of having paid the amount of tax, claim a rebate from the CRA for that amount of tax if it exceeds $2.00. More information on claiming rebates for amounts of tax paid in error can be found here: General Application for GST/HST Rebates - Canada.ca.

If a charity run small café made taxable sales (i.e., charged GST/HST) of food and beverages prior to the GST Holiday, those same sales would be relieved of GST/HST during the GST Holiday period.

Yes, the GST/HST relief for children’s clothing applies to both new and used clothing.

If the GST/HST legislation stipulates that a certain product qualifies for GST/HST relief during the GST Holiday period, sales of that qualifying item during the period should be treated as zero-rated during the period. Providing a 15% discount on sales of qualifying products does not permit a business to remove the GST/HST on a qualifying product that is not subject to GST/HST during the period. There would still be an indication of GST/HST charged and the retailer would be required to account for that amount of tax in their usual GST/HST return filing.

Yes, all food that is for human consumption other than foods sold through a vending machine or food that includes cannabis, is included in the GST/HST relief. This includes all chocolate whether sold in single pieces or boxes.

Delivery charges are dealt with in one of two ways depending on the agreement between the supplier and customer for the supply of any qualifying goods or services. The GST/HST relief during the GST Holiday period applies to the delivery charges related to the qualifying goods or services (including food delivery services) if the supplier is required to transport the qualifying items to the recipient (e.g., to the customer's premises) as part of the agreement terms for the supply, and the supplier remains responsible for the qualifying goods until it is delivered to the customer. The shipment in these circumstances is considered to be a single supply of qualifying goods or services, with the delivery included in the supply. The GST/HST relief can be applied to the delivery charges even if the charges are shown separately on the supplier's invoice.