What Canada’s 2-month GST/HST tax break means for you
Jordan Lavin
While inflation is back to the government’s target of 2%, it still feels like there’s a cost of living crisis in Canada. To help, the Federal Government has proposed a two-month tax break on the GST and HST on what it calls “holiday essentials.” Here’s what you need to know about this timely tax cut.
$6.3-billion in tax relief coming to Canadians
As governments often do when an election looms near, Trudeau’s Federal Government is attempting to curry favour with Canadians by putting money directly in their pockets.
A significant portion of the proposed tax cuts will come in the form of a two-month hiatus on GST and HST charges on a variety of items including food, children’s items, and even Christmas trees.
The government’s proposal would remove the GST and HST from what it calls “holiday essentials” for a two-month period starting on December 14th and ending on February 15th, 2025 . During that period, stores and restaurants will remove the applicable GST and HST charges on qualifying goods so you’ll pay less.
What items will be tax exempt?
The government has promised to remove the GST and HST from groceries that aren’t already zero-rated, restaurant meals, drinks, snacks, children’s clothing, and gifts.When the tax break takes effect, virtually all food and beverages will be tax-free as will most children’s items. It won’t matter where you go; big chains and mom and pop shops alike will be required to cut the tax.
The complete list of qualifying goods includes:
- Alcoholic beverages containing up to 7% alcohol by volume.
- Non-alcoholic beverages including fruit juice, juices from concentrate, soft drinks and bottled water.
- Sweet treats including candies, chocolates, ice cream, pastries, and pudding.
- Savory treats including chips, granola, nuts and popcorn.
- Prepared foods like salads, sandwiches, cheese plates, and foods that are hot to go.
- Restaurant meals and drinks at restaurants, coffee shops, pubs and food trucks. Food for delivery will be included in the tax cut but not any delivery charges themselves.
- Children’s items including clothing, footwear, diapers, car seats, jigsaw puzzles and toys intended for children under 14 years old. Those with these items on their gift shopping lists may be wise to wait until the tax holiday is in effect on December 15, to see these savings.
- Books and newspapers including print and audiobooks, but not magazines, or notebooks.
- Christmas trees and other decorative trees, whether artificial or natural.
- Video games including consoles, controllers, and games.
It’s worth noting that most of the qualifying goods outside of food, like children’s clothing, toys, books and video games, are ideal holiday gifts. If you don’t mind buying last-minute, you may want to wait until after December 14th to buy these kinds of items.
NDP leader Jagmeet Singh points out that monthly bills for things like hydro and heating fuel are notably absent from the list, but has promised to support the bill in Parliament because “people are desperate for relief.”
How much will I save in taxes?
The government estimates that Canadians will together save $1.6-billion in taxes thanks to this tax cut. How much you’ll save depends on whether your province charges GST and PST separately, or subscribes to the harmonized sales tax (HST) program.
In British Columbia, Alberta, Saskatchewan, Manitoba, Quebec and the Territories, only the 5% Federal GST will be removed from qualifying goods. For every $1,000 you spend on qualifying goods, you’ll save $50 in sales tax.
In Ontario and the Atlantic Provinces, the full HST amount will be removed. Consumers in Ontario will save $130 in sales tax on every $1,000 spent on qualifying goods, while consumers in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island will save $150 in sales tax on every $1,000 spent on qualifying goods.
$250 per Canadian also on the docket
Trudeau has also promised to give $250 to every working Canadian who earned less than $150,000 in 2023. Approximately 18.7 million people will qualify for the one-time rebate.
In Ontario, the provincial government has announced its own plan to make it rain, promising $200 for every taxpayer and child in the province. The one-time rebate will cost the province an estimated $3-billion dollars. A family of five would stand to gain $1,000 from the scheme.
The bottom line
Whether you like the government’s motivation, you’re sure to like the tax relief that’s coming your way. Most food, beverages and children’s items will be sales-tax exempt from December 14th to February 15th, and more tax relief is likely to come your way soon.