The GST/HST holiday has begun. Here’s how it works

Posted on December 12, 2024 by Peggy

Saturday marks the beginning of the Liberal government’s two-month GST/HST holiday that it says will give Canadians a break on the cost of some essential goods.

Bill C-78, the legislation implementing the tax break, passed its third and final vote in the Senate and received royal assent on Thursday.

In order for an item to be sold tax-free between December 14, 2024 and February 15, 2025, it must be paid for in full and delivered by the end of the tax break period.

The federal government says that items will be considered delivered once they are transferred from a supplier to a shipping service, or when they are put in the mail, rather than when they arrive at their destination.

The federal government says shoppers do not need to do anything to get the tax break, the GST or HST should simply not be charged at the time of purchase.

A government website explains that If people believe they have been charged GST/HST on a product that they shouldn’t have, they should request a refund from the supplier or retailer.

The tax holiday is taking place throughout the supply chain, so goods supplied to a wholesaler by a manufacturer, wholesaler or retailer will also not be taxed.

In provinces that have merged their provincial sales tax with the GST to create an harmonized sales tax (HST), the entire harmonized tax will be removed at the time of purchase.

Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island have harmonized sales taxes.

The parliamentary budget officer says the tax break will cost the federal government $1.46 billion, and will cost the provinces with HST $1.26 billion — but all of that could end up on the federal government’s books if the provinces decide not to waive compensation for the federal government’s measure.

The list of items exempt from the tax break is long. Christmas trees qualify but Christmas decorations do not. Imported goods are also exempt from the GST/HST providing they’re on the list of items that qualify for the tax holiday

Here’s a list of items getting a tax break:

Food and groceries

Prepared foods such as sandwiches, salads, platters and pre-made meals.
Snacks including chips, candy, baked goods, fruit-based snacks and granola bars.
Energy bars, but only if they are considered to be food by Health Canada are not enhanced by protein, caffeine, vitamins and/or minerals and meets other qualifications.
Gift baskets, as long as at least 90 per cent of the contents are qualifying food or beverage items.
Prepared meals and beverages, including delivery, but only when the food establishment delivers the meal.
Prepared meals delivered by a third party (the delivery cost is not tax-exempt).

Beverages

All non-alcoholic drinks, such as coffee, tea, carbonated drinks, juices and smoothies, provided they aren’t sold through a vending machine.
Alcoholic beverages such as beer, wine, cider and sake, so long as the alcohol volume is 22.9 per cent or less.
Spirit mixed coolers and premixed alcoholic beverages with an alcohol volume of seven per cent or less.
Energy and protein shakes, provided they aren’t enhanced with protein, caffeine, vitamins and/or minerals, and provided Health Canada considers them to be a food or beverage.

Restaurant meals and drinks

Meals purchased at pubs, bars, food trucks or other places serving food and beverages.
Mixed drinks served in restaurants and bars if they are qualifying beverages — sparkling wine and orange juice qualify, but a vodka and soda does not.
Tips paid on meals and drinks, but only if they are included in the bill.
Catering services that provide qualifying food and beverages.

Children’s clothing and accessories

Infant and children’s clothes, including accessories such as bibs, blankets, hats, belts, suspenders, gloves and mittens.
Footwear with an insole length of 24.25 cm or less.
Some sports clothing, such as jerseys, ski jackets, leotards, unitards and bodysuits that can be worn outside of sports or dance activities.
Diapers, both cloth and disposable, training pants or rubber pants designed to be used with diapers.
Children’s car seats, provided they meet Canadian safety standards and are not part of a stroller/carrier travel system.

Specialized items of clothing — including wetsuits, soccer cleats, bowling shoes, skates, ski boots and tap shoes — do not qualify.

Children’s toys and video games

Board games and card games, including playing cards and Pokémon cards.
Toys that involve building, creating or assembling structures.
Dolls, plush toys and soft toys and their accessories.
Toys marketed for children below 14 years of age.
Jigsaw puzzles for all ages.
Video game consoles and video games for consoles qualify, but downloadable or online-only games do not.

Collectibles — including hockey cards, dolls or other toys marketed to adults — do not qualify.

Books, magazines and newspapers

Most published books, including guide books and audio books.
Bound or unbound printed versions of scripture associated with any religion.
Magazines and periodicals bought with a subscription which have no more than five per cent of their printed space devoted to advertising.
Newspapers that contain news stories, editorials, features, or other information of interest to the general public and are published daily, weekly or monthly.

E-books and downloadable audio books do not qualify. Neither do books to write in, such as diaries, notebooks and agendas, and electronic and digital publications.