On November 21, 2024, the Government of Canada unveiled a GST/HST tax break proposal aimed at temporarily exempting taxable food items and other eligible goods from the GST/HST for a duration of two months, starting on December 14, 2024, and ending on February 15, 2025. This proposed exemption will encompass both the GST and the provincial portion of the HST, with the objective of assisting Canadians in saving on their holiday season purchases. The anticipated savings for consumers, along with the associated decrease in federal tax revenue, is projected to amount to $1.6 billion.

Retailers offering the temporarily prescribed products will be directed not to apply GST/HST at the point of sale during the 2024 – 2025 tax holidays. Consequently, there remains a limited timeframe for a diverse array of retailers to modify their billing systems to accommodate the new, temporary tax classification of the temporarily prescribed supplies.

A variety of food and beverage products were already free of GST/HST under the existing zero-rating provisions for basic groceries, and some participating provinces offer point-of-sale rebates for the provincial portion of the HST on additional items. Nevertheless, the suggested tax holiday will significantly broaden the scope of GST/HST relief to encompass many items that were previously taxable. For instance, nearly all food and beverages, including meals from restaurants and take-out services, will be exempt from GST/HST for the duration of the two-month period. It is important to note that the GST/HST relief will be applicable to both the purchase and importation of qualifying goods. The subsequent descriptions pertain to items that would be eligible for the suggested tax relief:

A majority of food and beverages intended for human consumption, which encompasses groceries, prepared meals and drinks, snack products, and alcoholic beverages (with the exception of spirits, but including beer, wine, ciders, and spirit coolers with an alcohol content of up to 7% by volume);

·        Clothing, footwear, diapers, and car seats designed for children.

·        Printed newspapers, books, and eligible audio books.

·        Christmas trees.

·        Specific types of children’s toys.

·        Jigsaw puzzles suitable for all age groups.

·        Video game consoles along with certain related accessories.

CRA publication “More money in your pocket: A tax break for all Canadians” provides more details on what is eligible for GST/HST relief under the proposal.