On November 21, 2024, the federal government announced that it will be introducing legislation in Parliament that would propose for certain groceries and holiday essentials (“Qualifying Goods”) to be fully and temporarily exempted from Goods and Services Tax/Harmonized Sales Tax (“GST/HST”).
As a result, businesses that sell such goods are expected to temporarily revamp their checkout system (both in-store and online) to remove the GST/HST on Qualifying Goods at checkout starting from December 14, 2024. This tax exemption is projected to be in effect until February 15, 2025, at which time businesses would need to revert back to their regular system.
The proposed exemption would apply to Qualifying Goods listed below that are delivered to the purchaser, and paid for, during the exemption period. The GST/HST would also be fully and temporarily relieved on an importation of these same Qualifying Goods if such goods are imported during the exemption period.
Below is a general description of the Qualifying Goods:
- Prepared foods, including vegetable trays, pre-made meals and salads, and sandwiches;
- Restaurant meals, whether dine-in, takeout, or delivery;
- Snacks, including chips, candy, and granola bars;
- Beer, wine, cider, and pre-mixed alcoholic beverages below 7 per cent ABV;
- Children’s clothing and footwear, car seats, and diapers;
- Children’s toys, such as board games, dolls, and video game consoles;
- Books, print newspapers, and puzzles for all ages; and
- Christmas trees.
Affected businesses should note that each type of Qualifying Good is defined under this proposed exemption with certain specific inclusions and exclusions. For example, print newspapers means print newspapers containing news, editorials, feature stories, or other information of interest to the general public that are published at regular intervals, but do not include most fliers, inserts, magazines or other periodicals.
Accordingly, businesses need to carefully examine the definitions to correctly determine if a good they sell is actually subject to this temporary exemption to ensure that they are fully compliant with this proposed exemption during the effective period.
