The Canadian government is implementing a temporary GST/HST holiday from December 14, 2024, to February 15, 2025. This holiday will remove these taxes from select essential goods.
Tax-free items
Food and beverages
- Prepared foods (vegetable trays, pre-made meals, salads, sandwiches)
- Restaurant meals (dine-in, takeout, delivery)
- Snacks (chips, candy, granola bars)
- Select alcoholic beverages (beer, wine, cider, pre-mixed drinks under 7% ABV)
Children's items
- Clothing and footwear
- Car seats and diapers
- Toys (board games, dolls, video game consoles)
Entertainment and seasonal items
- Books and print newspapers
- Puzzles (all ages)
- Christmas trees
For a full list of items that qualify for the holiday tax break, visit the Government of Canada information page.
Implementation requirements for retailers
Businesses and retailers are responsible for omitting HST and GST on the eligible items and implementing the holiday tax break within their own business. Wholesalers, manufacturers, distributors, retailers, restaurants, grocers, online marketplaces and food delivery businesses, among other businesses, are expected to be affected by the GST/HST holiday.
Business owners should:
- Remove GST/HST within their operating system or software for eligible items.
- Verify tax holiday settings on sales platforms (Shopify, Amazon).
- Exclude GST/HST on manual invoices during the holiday period.
Business impact analysis
According to the Canadian Federation of Independent Business (CFIB), a recent poll of 3,500 member businesses has highlighted significant concerns about the upcoming GST/HST holiday.
Implementation challenges
- 75% of respondents anticipate costly and complex implementation.
- The median cost for reprogramming point-of-sale systems is estimated at $1,000 per business.
- 65% report insufficient time to implement the required changes.
Competitive impact
Of the businesses polled, 71% believe large businesses and online retailers will be the primary beneficiaries of the tax holiday. Many small businesses already express concern about their ability to compete during the holiday period.
Operational concerns
More than two-thirds expect difficulty identifying tax-exempt items. Most provinces lack clear labeling requirements for taxed items, which can confuse businesses and consumers.
Consumer behavior impact
Around 66% of businesses anticipate customers postponing purchases until the tax holiday, and 54% expect customers to return recently purchased items to re-buy during the tax-free period. These behavioral changes could significantly impact business cash flow.
Action plan for small businesses
Technical preparation
Analyze and leverage your business’ technology to ensure that you’re prepared to adhere to the upcoming holiday tax break.
- Verify POS software or operating system compatibility and automate what you can within the time given. Your POS provider may be able to provide assistance with updates.
- Confirm automatic updates on third-party platforms
- Test systems for accurate tax removal prior to the launch date of the tax break
Operational readiness
Train staff on:
- Identifying tax-exempt items.
- Handling customer inquiries, including a high-level overview of the holiday and where to direct them if they have further questions.
- Managing returns and exchanges, including if your staff mistakenly charge GST/HST on an exempt item.
- Providing a great customer experience during the holiday and amidst a potential increase in shoppers within retail locations.
Prepare your business further by:
- Creating and posting signage in your location.
- Sending digital communications through email and social media informing customers of the tax holiday.
Inventory management
- Consider increasing the stock of popular tax-exempt items.
- Monitor sales patterns and plan for potential sales pattern changes.
- Plan post-holiday inventory levels.
Customer and business strategy
- Develop clear customer communications.
- Create promotional plans for exempt items to attract more customers during the tax-exempt period.
- Maintain detailed records of implementation.
- Document all implementation steps and keep records of processing errors.
Financial preparation
- Check in with your bookkeeper and accountant to ensure your accounting and sales records are in good shape ahead of the holiday, and you’re prepared to capture accurate sales records during the holiday.
Tax correction process
If GST/HST is incorrectly charged, your small business may be able to claim a rebate using CRA's Form GST189.
For further support with the tax holiday, visit the Government of Canada’s information page for details.
