On Nov. 21, 2024, the Canadian government announced its intention to provide temporary Goods and Services Tax/ Harmonized Sales Tax (GST/HST) relief from the qualifying goods listed below.
Legislation was tabled on Nov. 27, 2024 to provide relief during the eligible period of Dec. 14, 2024 to Feb. 15, 2025, provided both of the following conditions are met for qualifying goods:
- All of the consideration is paid during the eligible period.
- The goods are delivered or made available to the recipient during the eligible period.
Goods will be considered delivered or made available to the recipient when possession is transferred to a common carrier or consignee retained by the supplier on behalf of the recipient to ship the property, or when the goods are sent to the recipient by mail or courier.
The relief is provided not only at the retail level, but also throughout the supply chain as long as the conditions noted above are met. Any supply made before Dec. 14, 2024 will also qualify if both conditions are met.
Relief is also provided to qualifying goods that are imported during the eligible period.
Which goods qualify for GST/HST relief ?
Qualifying goods that are eligible for the new relief measures include:
- Food and beverages that are not already zero-rated, including:
- Restaurant meals and other prepared meals
- Beer, wine, ciders, and spirit coolers up to 7% ABV, but not spirits
- Cakes, muffins, cookies, and similar products in quantities of less than six
- Carbonated beverages, chips, candies, and other snacks, but not food or beverages sold through vending machines
- Clothing designed for babies and children up to girls’ size 16 or boys’ size 20
- Children’s footwear designed for babies and girls or boys with an insole length of 24.25 centimetres or less
- Children’s diapers, liners, training pants, and rubber pants
- Children’s car seats
- Select toys designed for use by children under 14 years of age including board games, card games, playing cards, dice, dolls, and plush toys
- Jigsaw puzzles
- Video game consoles, controllers, and physical game media
- Printed newspapers, books, and scriptures of any religion
- Audio recordings that are the spoken recording of a printed book
- Natural and artificial Christmas and similar decorative trees
What the GST/HST relief means for businesses
Businesses that sell these qualifying goods should prepare now to be able to provide relief beginning Dec. 14, 2024. This may include:
- Understanding which goods qualify for relief and which do not.
- Monitoring delivery and payment dates to ensure sales qualify for relief.
- Reconfiguring point-of-sale (POS) systems and tax engines.
- Preparing to revert once the temporary relief ends.
If a business fails to correctly administer this tax relief and is later audited by the Canada Revenue Agency, it may have no recourse to correct the matter with customers that are end-consumers. This means it’s critical for businesses to accurately capture the changes in their POS systems and tax engines.
Further, businesses that are recipients of qualifying goods should be certain that processes are in place to ensure input tax credits are not overclaimed during the qualifying period (e.g., employee reimbursements for meals, EDI systems, etc.).
