Bill C-78, the Tax Break for All Canadians Act, has been adopted by the House of Commons and is now before the Senate. The Bill proposes a temporary GST/HST tax break on food, beverage, books, children’s supplies, toys, and holiday decorations.
If passed by the Senate, the tax break would begin on December 14, giving little time for businesses to implement the point of sale and accounting system changes required to action the tax break.
We’ve highlighted sections of the guidance most likely to impact organizations in our sector, and have provided our own guidance on how to implement changes to your accounting processes so you’ll be prepared when the tax break comes into force.
You can read the Government of Canada’s explainer through this link: GST/HST holiday tax break - Canada.ca
Overview
The program requires businesses to stop charging GST/HST on qualifying goods at checkout as of December 14, 2024. It is set to run until February 15, 2025. Businesses are responsible for not charging GST/HST on qualifying goods during this period.
This measure temporarily zero-rates supplies of the qualifying goods and services, meaning the tax rate charged on these items during the specified period is 0%. Businesses registered for GST/HST can still claim back the tax they paid on expenses related to these exempted items, as long as the goods or services meet the qualifying criteria.
What is impacted?
The following types of items qualify for the GST/HST holiday tax break:
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
Christmas and similar decorative trees
Food and beverages and related services
We recommend everyone review each category in detail on the Government of Canada’s website: GST/HST holiday tax break - Canada.ca.
The two categories our audience is most likely to be affected by are Physical books, and Food and beverages and related services. You can find a full list of details on what qualifies and what is excluded at the bottom of this email.
Qualifying items also must both be paid for in full and delivered/made available to the buyer during the period from December 14, 2024 to February 15, 2025.
When making purchases
Businesses will be responsible for implementing the tax break, and as a shopper, you will automatically receive this tax break on the qualifying things you buy. There will be no GST/HST charged on the item when you make your purchase.
If you receive an invoice or bill for a qualifying item during the period that includes GST/HST, we recommend contacting the supplier and requesting an updated invoice.
When making Sales
Make sure to use the zero-rated tax code when selling qualifying products during the holiday period.
If you are using a point of sale (POS) system like Square, Shopify, etc., you will need to make sure that the tax code assigned to each qualifying item is set to zero-rated.
Using the zero-rated codes will ensure that Input Tax Credits (ITCs) can still be applied against your total taxes payable for the period.
Books and Food & Beverage detailed breakdown
These items qualify as physical books and would have no GST/HST charged:
Most published, printed books (hardcover or softcover)
Updates of printed books
Guide books, and atlases that do not mostly contain street or road maps
Magazines and periodicals (that have no more than 5% of their printed space devoted to advertising) supplied by subscription, if all the consideration is paid during the relief period and only for those magazines or periodicals that are delivered during the relief period
Physical audio recordings of printed books, if 90% or more of the recording is a spoken reading of a printed book, including abridged versions (for example, a cassette, compact disc, or reel-to-reel tape version of a published book)
Physical recordings of a performance of a published play
Bound or unbound printed versions of scripture of any religion, such as the Quran, the Bible, prayer books, missals, hymn books, and Torah scrolls
Illustrated versions of religious scriptures (for example, comic book versions)
Printed books that are wrapped or packaged for sale as a single item with a physical read-only medium that is made up of either a reproduction of the printed book or material that makes specific reference to the printed book
These items would not qualify as physical books and would still have GST/HST charged:
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
Colouring 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 Blu-ray discs with textual or visual information
These food and beverage related items would qualify and have no GST/HST charged:
Restaurant meals, whether dine-in, takeout, or delivery (including meals at cafés, pubs, food trucks, and other food and beverage establishments)
Prepared foods including sandwiches, salads, vegetable or cheese platters, and pre-made meals
Snacks including chips, candy, baked goods, fruit-based snacks, and granola bars
Non-alcoholic drinks, such as coffee, tea, carbonated drinks, juices, and smoothies
Beer and malt beverages
Wine, cider and sake (including fortified) that are 22.9% alcohol by volume (ABV) or less
Spirit coolers and premixed alcoholic beverages that are 7% ABV or less
Catered meals, including the catering fee for providing, preparing, or serving qualified food and beverages
These items would not qualify and would have GST/HST charged:
Food or beverages sold from a vending machine
Alcoholic beverages (other than beer, malt beverages, wine, cider, and sake) with more than 7% ABV
Dietary supplements
Cannabis products, even if they are food or beverages
Other items that do not qualify as food or beverages for human consumption (for example, pet food)
If you have any questions, please feel free to reach out to us and we’d be happy to provide an advisory call to support you!
The above is a version of a recent edition of Young Associates’ newsletter. Yu can sign up for our newsletter list at the link at the bottom of this page.
