❄️ Holiday GST/HST Break: Does it feel like Christmas?🎄

The Government of Canada recently published that the Tax Break for All Canadians Act, also known as the Holiday GST Break, has received royal assent, making it the law of the land. Canada specifies that this temporary GST/HST tax break on certain items will run from December 14th to February 15th. In a number of provinces, including Ontario, this means you will see additional savings on specific items. The purpose of the Act, according to the Government of Canada, is to make life more affordable for Canadians. For the first time, Canada is relieving its citizens of the cost of holiday essentials to make the holiday season a little less financially taxing (haha). Today, let’s talk about how you can capitalize on this new law this year.

The Government of Canada’s website lists several categories of items that will qualify for the GST/HST break. The list includes: food; beverages; restaurants, catering, and other food or drink establishments; children’s clothing and footwear; children’s diapers; children’s car seats; children’s toys; jigsaw puzzles; video game consoles, controllers, and physical video games; physical books; printed newspapers; and finally, Christmas and similar decorative trees.

What types of foods can you get a deal on? Prepared foods, snacks like chips and candy, energy and protein bars that comply with a list of criteria, and gift baskets that consist 90% of items just mentioned. Approved beverages include the basics like juice, tea, and coffee, wines or ciders that are 22.9% alcohol by volume or less, energy drinks that meet a long list of criteria, and beer and malt beverages. Prepared foods from a restaurant can qualify, but not if you order delivery from a separate platform like Doordash. If you order pizza directly from a pizza place and they get their 16-year-old employee to drive it to you, that will be eligible for the deduction.

As a homeowner, the most exciting category will be the “Christmas and similar decorative trees” category, which is unfortunately the smallest. 3 items will qualify for the tax break: natural trees, artificial trees, or a Hanukkah tree or bush. If you want ornaments, wreaths, or other decorations “that are not in the physical form of a tree,” you need to pay full price.

In keeping with the charitable nature of the season, we’ll assume that this action is well meaning and not a sad political gimmick. Unfortunately, there are those that are very unhappy with this rollout. Retailers, especially small ones, did not have sufficient time to prepare. Those that did, found that the costs associated with technically making the change in their systems could outweigh the potential profits.

Like our entire Tax Act, the rules for this holiday tax are confusing. For example, Pokémon cards are tax exempt, hockey cards are not. (I’m not sure what message the government is sending by focusing on junk food, alcohol and video games over sports.) While this division seems silly, I’m sure an expert consultant was contracted to draft this rule. The problem will come when a retailer has to explain it to a customer.

This said, the best part for the consumer is there seems to be no jumping through hoops required; the government’s website says “as a shopper, you should automatically receive this tax break on qualifying items you buy. There should be no GST/HST charged on the item when you make your purchase.” Also, they say that generally, shoppers don’t need to keep their receipts in case the CRA starts calling you for their money back. The government says you only need to keep your receipt if you are accidentally charged GST/HST in error. If you have been charged tax on an item that is supposed to be exempt this season, you aren’t supposed to call any government agency. They want you to go right back to the retailer you bought the item from and request a refund. The government says they will come after businesses who don’t tax the tax off their items. They say “businesses who make reasonable efforts to comply with the legislation will not be the focus of our compliance actions. We will be focusing on situations where businesses willfully & egregiously refuse to comply with the temporary measures, such as a business that collects the GST/HST and does not remit it to the CRA.”

While the deduction does not seem to have anything directly homeowner related, it may make the winter season less bleak, even if your Doordash is not exempt. Just try not to think about the fact that the “tax holiday” is for relief on funds that have already been taxed once through income tax. Perhaps the greatest unintended positive consequence of this action will be for Canadians to start to question our system of double and triple taxation. Addressing that would truly reduce the cost of living and increase affordability for all.