Canadians received a temporary GST/HST tax break from Dec. 14, 2024 to Feb. 15, 2025. The Tax Break for All Canadians Act (Bill C-780) received Royal Assent as of Dec. 12, 2024, and is now recognized as a law.
During the tax break, no GST or HST is charged on qualifying items including but not limited to; food, alcohol and cannabis products, beverages, children’s clothing and restaurant dining/catering. PepsiCo and Coca-Cola have opted not to participate and were required to notify their customers.
This program is set to help Canadians feel relief from inflation and the cost of living, according to a statement put out by Prime Minister Justin Trudeau.
The holiday was announced in November 2024 and some small business owners have criticised the program due to how little notice they received. Due to the timing of the Bill’s release, consumers were encouraged to hold off their holiday shopping until Dec. 14.
“The issue that we have with that is that when they [the customers] held out, it means we lost sales for like a week and a half beforehand in December,” Mandy Brouse, co-owner of Wordsworth Books in Uptown Waterloo, said.
Words Worth Books has been open for nearly 40 years in the Kitchener Waterloo Region. The store carries many genres of fiction and non-fiction books, magazines, puzzles, toys and more. Many of their products fall under what is covered in the tax holiday.
Brouse said even waiting until after the holidays would have helped.
“[Small businesses] make all of our profits during that time, it’s really core and essential for keeping our business open for all year round. So that time is very key,” Brouse said.
Statistics Canada’s consumer price index report in December said Canada’s annual inflation rate fell to 1.8 per cent as opposed to the projected 2.3 per cent without the tax break. In 2022, inflation in Canada reached rates mirroring the 1980s with prices paid by consumers rising by 6.8 per cent.
The Canadian Federation of Independent Business (CFIB) members up to date on what small businesses need to do.
The organization recommends business owners to do their best and follow the guidelines published by the Department of Finance and the Canada Revenue Agency (CRA). Consumers and businesses that have mistakenly paid the GST/HST on eligible good can go to the CRA for a refund.
“[CFIB] did kind of a little survey that went out through their membership, just to find out about what people were thinking about this rollout at the time…I feel like they informed us as soon as they found out too,” Brouse said.
Hundreds of business owners called CFIB with worries about the holiday implementation. Many are concerned about making a mistake in interpreting the rules, especially given the rushed nature of the change.
Because Bill C-780 received Royal Assent in a short amount of time, many businesses were left to change their point-of-sale systems in a rush. Businesses not able to participate are urged to document why this choice was made and to follow normal practices by remitting all GST/HST to the government.
“The evening of Dec. 14, I was frantically working through my point of sale to take the taxes off all of these items. My point of sale was friendly in terms of doing that in a bulk manner, but it still took, a number of hours,” Sylvia Horn, owner of Gifted, said.
“Now the other end, putting it all the taxes back on Feb. 15, is going to be, kind of a bigger headache,” she said.
Gifted is a gift boutique in Belmont Village which opened in 2015 and recently celebrated its tenth anniversary. It sells a variety of fun and practical items including puzzles, lip balm, candles, home decor and more. Horn noted it was difficult to measure its effect on sales due to the busy holiday season. She employs seven staff members and trained them quickly on the guidelines.
“Some customers thought it applied to everything across the board, and so they were confused why they were being charged tax on certain things. I feel like it was a little bit rushed through, so maybe they weren’t able to communicate it [properly],” Horn said.
Due to the rushed nature of the bill’s implementation, small business owners are worried about making mistakes and triggering an audit.
The main risk would be collecting the taxes and not remitting it to the government. Even if the tax is collected in error, businesses must remit all GST/HST as normal. Many have resorted to creating their own procedures for dealing with the tax holiday.
“I basically just had a little point form sheet at the at the till so that people could reference it if anybody asked questions. And then also any incoming inventory, because all of the staff inputs the incoming inventory, they would then have to know whether or not it was a taxable item or not,” Horn said
From Nov. 26 to Nov. 27, CFIB conducted a flash member survey about the proposed bill and found only four per cent of small businesses expected stronger sales. Most small business owners are opposed to the measure, including 62 per cent of respondents that were required to implement it.
Leave a Reply