On Nov. 21, 2024, the Department of Finance announced it would temporarily introduce a measure to implement a Goods and Services Tax/Harmonized Sales Tax (GST/HST) break for Canadians for the two‑month period from Dec. 14, 2024 to Feb. 15, 2025.
This legislation was hastily prepared and passed through the House and is well on its way through the Senate. A $250 rebate cheque was originally announced alongside the GST/HST holiday tax break, but was not included in the bill and will need to be passed separately. This is largely understood to be the result of low support for the cheques.
Below is a detailed summary of the legislation expected to pass imminently.
Purpose
From Dec. 14, 2024 to Feb. 15, 2025, the GST/HST holiday tax break provides temporary tax relief by zero-rating the sales of specific items during the holiday season.
Harmonized (HST) provinces
For Ontario, Nova Scotia, Prince Edward Island, New Brunswick and Newfoundland & Labrador, the tax relief will apply on eligible supplies made in those provinces.
Quebec (QST)
As of Nov. 29, 2024, the Quebec government has indicated it will not offer a corresponding QST relief.
British Columbia, Saskatchewan and Manitoba PST
As of Dec. 2, 2024, no announcement has been made by these provincial governments regarding implementation of corresponding provincial sales tax relief.
Qualifying items for tax relief
- Children’s clothing and footwear: Includes baby clothes, children’s garments up to girls’ size 16 and boys’ size 20, and footwear with insole length of 24.25 cm or less. Excludes costumes and garments used exclusively for sports and recreation but sports clothing not specialized for a sport, such as jerseys, are included. Also includes accessories such as socks, hats, mittens, gloves, bibs and receiving blankets.
- Children’s diapers: Includes diapers (cloth or disposable), diaper inserts or liners, training pants and rubber pants.
- Children’s car seats: Must meet Canada Motor Vehicle Safety Standards.
- Children’s toys: For children under 14 years old, including board games, card games, dolls and plush toys. Excludes collectibles like hockey cards and dolls and adult-marketed toys like adult Lego sets.
- Jigsaw puzzles
- Video game consoles and accessories: Includes controllers and physical video games, but excludes other accessories like headsets.
- Printed books and newspapers: Excludes digital publications and certain printed materials like coloring books, agendas and calendars. Newspapers must be published at regular intervals and contain information of interest to the general public.
- Audio books
- Christmas trees and decorative trees: Includes both natural and artificial.
- Food and beverages: Includes most food and beverages for human consumption except if sold through a vending machine. Includes restaurant meals, catered meals, prepared foods and snacks. Non‑alcoholic beverages like carbonated drinks, coffee, teas, juices and smoothies are included, as are alcoholic drinks such as beer, malt liquor, wine, cider and sake. Spirit coolers and premixed drinks with 7 per cent ABV or less are also included, but other spirits are not.
Payment terms to qualify for tax relief
- Items are paid in full between Dec. 14, 2024 to Feb. 15, 2025.
- If a deposit was paid on an item before Dec. 14, 2024, it qualifies for tax relief if:
- The remaining amount is paid between Dec. 14, 2024 to Feb. 15, 2025
- The item is delivered or made available between Dec. 14, 2024 to Feb. 15, 2025.
Delivery terms to qualify for tax relief
- If a common carrier or consignee is used to deliver the items on behalf of the customer, the item is deemed to be delivered to the customer on the day the item is transferred to the common carrier or consignee.
- If the item is sent to the customer via mail or courier, the item is deemed to be delivered to the customer on the day the item is mailed or is transferred to the courier.
For consumers
The GST/HST relief is automatically applied at the point of sale for qualifying items.
For businesses
- Zero‑rate the GST/HST on qualifying items during the relief period on sales to both consumers and other businesses (applies at retail or wholesale).
- No change in eligibility to claim input tax credits on the GST/HST paid on inputs.
- You must maintain regular GST/HST records and reporting.
Imported goods
Qualifying imported goods are eligible for the GST/HST relief if they meet the other conditions.
For more details, visit the CRA's official page on the GST/HST holiday tax break.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help you navigate the complexities of the Canadian tax system.
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