The GST/HST holiday tax break kicks in this week. Here is what is covered

Starting December 14, 2024, Canadians will benefit from a temporary GST/HST tax break aimed at reducing the cost of essential goods during the holiday season. This initiative, part of the federal government's broader strategy to alleviate living expenses, will run until February 15, 2025.

During this period, the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) will be waived on a variety of items. Eligible products include prepared foods such as sandwiches and salads, snacks like chips and candy, children's clothing and footwear, diapers, restaurant meals, and certain alcoholic beverages with an alcohol content of 22.9% or less. Additionally, printed books and newspapers are included, though e-books and digital publications are not.

To take advantage of the tax break, consumers need only purchase qualifying items; the GST/HST exemption will be applied automatically at the point of sale. It's important to note that for an item to be tax-free, it must be paid for in full and delivered by the end of the tax break period. The federal government clarifies that items are considered delivered once they are transferred to a shipping service or mailed, not necessarily when they arrive at their destination.

The financial impact of this measure is significant. The federal government estimates a cost of approximately $1.46 billion, with provinces that have harmonized sales taxes potentially incurring an additional $1.26 billion in lost revenue. However, some provinces, like Ontario, have indicated they will not seek compensation, which could reduce the overall financial burden on the federal government.

While the tax break offers relief on many items, certain products remain taxable. For example, Christmas trees qualify for the exemption, but decorations do not. Similarly, e-books and downloadable audio books are not included in the tax-free list. Consumers are advised to check the eligibility of specific items to fully benefit from the tax holiday.

This GST/HST holiday is part of the government's efforts to support Canadians facing high living costs, especially during the festive season. By reducing the tax burden on essential goods, the initiative aims to make holiday shopping more affordable for families across the country.