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In order to help Canadians make the most of their money, the Canadian government is planning to get rid of GST or HST on many different essential items in Canada to allow for tax relief and help line people’s pockets as well as pay their monthly bills. They’re also planning to send cheques of $250 to eligible Canadians in the spring.
How the GST Holiday Works
Prime Minister Justin Trudeau announced a proposed bill that starting on December 14, 2024, all Canadians will be getting a tax break on certain items and realize tax savings. You will get a GST or HST exemption, depending on which one your province uses. This tax break is supposed to last 2 months, meaning that it will end on February 15, 2025. That said, you may still be required to pay PST.
GST Exempt Items
The government is including a variety of essential items in this temporary tax exemption. These include:
- Christmas trees
- Alcoholic beverages such as beer, wine and cider
- Restaurant meals
- Prepared foods
- Snacks
- Books, print newspapers and puzzles
- Children’s clothing, diapers, footwear and car seats
- Children’s toys, including video game consoles
While this does include a variety of items, it may surprise you to see that items related to the holidays are also covered. Some popular items you’ll be able to include in this list are:
- Candy floss
- Carbonated beverages
- Chewing gum
- Corn chips
- Flavoured whipped dessert product
- Fresh meats
- Frozen pudding
- Fruit bars
- Fruit flavoured beverages
- Ice milk
- Juice bars
- Popcorn coated with flavour
- Sweetened filling
- snack mixtures
- Seeds
- Granola products
- Prepared salad
- Non-carbonated juice
- Lunch counter meals
And that’s just the tip of the iceberg. Anything you purchase at coffee shops, concession stands, restaurants, and take-out outlets will provide a tax break. It includes most beverages sold, beverages heated, and beverages dispensed. It pretty much covers all of the holiday essentials this holiday season. That said, not all alcoholic beverages are exempt from GST. It excludes spirits, spirit coolers, and anything 7 percent alcohol and higher.
Who Qualifies for the $250 Cheques
Along with the GST break, the government of Canada is also planning on offering cheques in the amount of $250 to qualifying middle-class families. In order to qualify for this, you have to have worked in 2023 and had an income below $150,000. You also qualify if you received Employment Insurance, paid EI premiums or made CPP contributions. You should receive this via cheque or direct deposit by April 2025.
The liberal government is referring to this $250 rebate as the Working Canadians Rebate. It is intended to help those who have been most affected by the rapid increase in inflation. It’s estimated that this rebate will end up helping over 18.7 million Canadians.
How this Works for Each Province
As we previously mentioned, the amount you save with this GST break will depend on which province you live in. In Nova Scotia, Prince Edward Island, New Brunswick, Newfoundland and Labrador, you’re paying 15% HST (Harmonized Sales Tax). In Ontario, the Harmonized Sales Tax Rate is 13%, and the rest of Canada pays 5% of the Goods and Services Tax, and some pay Provincial Sales Tax on top of it.
For those provinces that pay HST, their PST and GST are combined. This means that the provinces that charge HST pay no tax at all on eligible items. However, the provinces in Canada that charge both PST and GST will still have to pay PST. Even though it doesn’t make much of a difference in most provinces, it will help you make the most of your funds for the holiday season.
Is the $250 Taxable?
While this $250 credit is given based on your annual taxable income, the actual credit that you receive is actually non-taxable. This means that you won’t have to report what you receive on your annual income tax return, unlike when you receive other benefits. The good thing is, though, that you don’t have to apply.
How Businesses Will Implement the GST Tax Break
Independent businesses and retailers that sell products that are considered to be part of the tax break will be required to have the GST/HST removed from the items by the start of business on December 14, 2024. This will then have to stay in effect until February 15, 2025. That said, how this is done is based on how the business runs its Point of Sale system since the government can’t set prices.
For those who sell on different platforms, such as Amazon, whether or not the GST/HST will be done automatically by the third-party company is based on the individual company. In order to figure out who is taking care of this, if you’re a business owner, then the best course of action is to contact them directly. This will give you time to make the manual changes yourself if need be.
Those who use a custom Point of Sale System will go about this a little bit differently. With this type of system, the manufacturer will need to implement the changes. They can customize the Canadian GST holiday tax so it can be simple to use during the time period needed.
The last type of invoicing you need to consider is manual invoicing. Whether it’s being done by accounting software or a manual invoice, whoever is creating this invoice will need to account for the GST/HST that isn’t being charged. No matter which method is being used, though, it is up to you as a business owner to ensure that the correct items are adjusted properly.
Will You Still Receive Other Benefits?
Since the $250 credit isn’t tax deductible, it won’t affect your ability to collect other benefits that you may qualify for through the federal government. Also, you don’t have to qualify for other benefits like the Child Tax Benefit, Canada Workers Benefit, or even the Carbon Tax Rebate. All of these have their own set of qualifications that are separate from the Canada Worker’s Rebate.
What to do if You Still End Up Paying the GST/HST
Due to the fact that most GST/HST tax breaks will have to be implemented manually, it’s possible that you may still end up paying the tax on items that are eligible for the tax break. If this does happen, you’re still able to claim GST; you just need to fill out a form.
The form that you’d be required to fill out is GST 189, which is the general application for the GST/HST rebates. You can find this form right on the CRA website. To do this is actually quite simple. All you need to do is provide your details and then select code 1C as your reason. This is the code for the incorrect amount paid. You should also provide your receipt to prove that you paid this amount in error.
When These Reliefs Options Will Be Approved
As of right now, the proposed bill to offer a GST/HST tax break in December has been approved by the house and has been sent to senate meaning the approval should come in soon. That said, the $250 Canada Worker's Rebate bill is not going to be implemented right now. This is due to the fact that other political parties have to vote in favour of the bill and they want the credit to be avaialbe to all Canadians with incomes below $150,000, not just those who were working in 2023.
At this time it's unknown if the $250 credit will come into affect at all. However, there is a possibility the bill wil be presented again with an inclusion for all Canadians who filed their taxes, not just those who were working in 2023.
Final Thoughts
With the rising cost of living for Canadians, the Canadian government has been working hard to find ways to save Canadians more money. It started with the Canada Affordability Plan and the Canada Dental Benefit, and now they’re offering the Holiday GST tax break as well as the Canada Worker’s Rebate.
The great thing about most of these programs is that you don’t have to apply for most of them. As long as you meet the requirements and file your annual income tax return, you’re able to start receiving the benefits that you’re eligible for. When it comes to GST savings, you’re able to save a little more money this holiday season, no matter how much income you make.
