A temporary free GST/HST on specific items will be in effect from December 14, 2024, to February 15, 2025. Throughout this tax relief period, qualifying items will not incur any GST or HST, depending on the applicable tax in the respective province or territory. The relief from GST/HST is now implemented through legislative amendments that introduced temporary zero-rating provisions to the Excise Tax Act (ETA). This is a favorable development for non GST/HST registrants. The GST/HST holiday, moreover, will not affect GST/HST registrants’ ability to claim input tax credits.

Some affected businesses, however, have expressed concerns on the timing of this change and their ability to cope with the short-noticed update. The introduction of temporary zero-rating provisions may present challenges for numerous organizations, given that the tax relief will be applicable across supply chains and is set to take effect in approximately two weeks.

Under Tax credits and benefits for individuals – GST/HST break, the Government of Canada has announced the eligible items and how to get GST/HST refund or rebate when charged in error. The same items categories announced on November 21, 2024 in the GST/HST tax break proposal were detailed under Tax credits and benefits for individuals – GST/HST break. All payments for an eligible supply must be completed within the eligible period commencing on December 14, 2024, and concluding on February 15, 2025, and the relevant property must be delivered, or made accessible to, the recipient within the same timeframe. For the purposes of this provision, delivered or made available to the buyer between December 14, 2024, and February 15, 2025, means delivered to the recipient when it is dispatched via mail or courier, or when the supplier transfers possession of the property to a common carrier acting on behalf of the recipient.

GST/HST will not be charged on the following items from December 14, 2024, to February 15, 2025:

●       Food and beverages. Except for food and beverages sold from a vending machine, a gift basket that contains food or beverages and other items, if less than 90% of the total value of the basket corresponds to items that would have no GST/HST charged on them if they were supplied separately, alcoholic spirits and liqueurs, alcoholic beverages (other than beer, malt beverages, wine, cider, and sake) with more than 7% ABV, dietary supplements, Cannabis products sold in the form of food or beverage, throat lozenges, and other items that do not qualify as food for human consumption (for example, pet food). Tax credits and benefits for individuals – GST/HST break gives more details on dietary supplements exclusion.

●       Restaurants, catering, and other food or drink establishments. When a dining establishment charges a customer directly for the delivery of a prepared meal, the delivery service is eligible for the same tax treatment as the prepared meal itself. Conversely, when a prepared meal is ordered via a platform, two distinct transactions take place from the CRA point of view:

1.      The prepared meal is supplied by the dining establishment to the customer.

2.      A delivery service is rendered by the platform provider to the customer.

The prepared meal supplied by the dining establishment to the customer is eligible for GST/HST relief during the designated period. In contrast, the delivery service provided by the platform provider to the customer does not qualify for GST/HST relief.

●       Children's clothing, footwear, diapers, car seats, and toys. Exclusions include specialized clothing and footwear designed exclusively for sports or recreational activities (for example: wetsuits, soccer cleats, bowling shoes, skates, ski boots, tap shoes, pointe shoes), adult clothing and footwear, even when purchased for a child, costumes and make-up, jewellery, Children's diapers provided as part of a diaper service, adult diapers (even if they are purchased for a child), children's car seats and car booster seats that do not meet the Canada Motor Vehicle Safety Standards, travel systems that are a combination of stroller, carrier and car seat sold as a single package, games and toys that don’t meet the requirements above, collectibles that are not intended for play or learning, such as hockey cards or collectible dolls, toys and model sets that are marketed for adults (for example, adult construction brick or train sets).

●       New and used jigsaw puzzles.

●       Video game consoles, controllers, and physical video games. Exclusions are downloadable or online-only games, and other gaming accessories, such as chairs and headsets.

●       Physical books. Exclusions include e-books, downloadable audio books and e-audio books, magazines and periodicals that are not purchased by subscription or that have more than 5% of their printed space devoted to advertising, books designed primarily for writing on, such as address books, diaries, journals, and notebooks, coloring books, scrapbooks, sticker books, sketchbooks and albums for photographs, stamps or coins, brochures, pamphlets, catalogues and advertising material, warranty booklets and owner's manuals, agendas and calendars, certain directories and collections of street or road maps, cut-out and press-out books, collections of patterns, stencils, or blueprints, programs for events or performances, rate books, recordings of performances of musical scores, recordings of unpublished manuscripts, CD-ROMs, DVDs, and blue-ray discs with textual or visual information.

●       Printed newspapers. Exclusions are electronic and digital publications, flyers, inserts, magazines, periodicals, and shoppers.

●       Christmas and similar decorative trees. Exclusions include decorations for a Christmas tree or other decorative tree, holiday related decorations that are not in the physical form of a tree (for example, Christmas tree themed decorations for a wall), poinsettia plants, mistletoe, and wreaths.

The Tax credits and benefits for individuals – GST/HST break includes references to detailed information, examples, and exclusions pertaining to each qualifying category of items. The CRA guidance publication also elaborates on the treatment of partial payments and prepayments for the eligible supplies; it specifies that only those partial payments made within the designated eligible period will be eligible for GST/HST relief. Additionally, a deposit made for an eligible item prior to the commencement of the GST/HST holiday will also qualify for relief, contingent upon the item being supplied and the remaining balance being settled during the eligible period.