GST/HST Holiday Kicks Off Tomorrow: Key Details You Need to Know

Starting Saturday, Canadians will enjoy a two-month reprieve from the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on select essential goods, courtesy of the federal government’s newly introduced tax holiday. The initiative, implemented through Bill C-78, received royal assent on Thursday, paving the way for the tax break to run from December 14, 2024, to February 15, 2025.

To qualify for the tax exemption, purchases must be fully paid for and delivered by the end of the tax holiday period. Delivery is defined as when items are handed over to a shipping service or mailed, not when they reach their final destination. The tax relief applies automatically, with GST or HST simply excluded at the point of sale—no additional steps are required from consumers.

The tax exemption extends throughout the supply chain, encompassing manufacturers, wholesalers, and retailers. In provinces with harmonized sales taxes—Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island—the full HST will be removed at checkout.

The Parliamentary Budget Officer estimates the federal government will forgo $1.46 billion in revenue, with HST provinces potentially losing $1.26 billion. However, these provinces may request federal compensation to offset their losses.

What Qualifies for the Tax Holiday?

The list of eligible items is extensive, but there are notable exclusions. For instance, while Christmas trees are tax-free, holiday decorations are not. Imported goods are exempt only if they are on the government’s approved list. Below are some highlights:

Here’s a list of items getting a tax break:

Children’s toys and video games

• Board games and card games, including playing cards and Pokémon cards.

• Toys that involve building, creating or assembling structures.

• Dolls, plush toys and soft toys and their accessories.

• Toys marketed for children below 14 years of age.

• Jigsaw puzzles for all ages.

• Video game consoles and video games for consoles qualify, but downloadable or online-only games do not.

Collectibles — including hockey cards, dolls or other toys marketed to adults — do not qualify.

Children’s clothing and accessories

• Infant and children’s clothes, including accessories such as bibs, blankets, hats, belts, suspenders, gloves and mittens.

• Footwear with an insole length of 24.25 cm or less.

• Some sports clothing, such as jerseys, ski jackets, leotards, unitards and bodysuits that can be worn outside of sports or dance activities.

• Diapers, both cloth and disposable, training pants or rubber pants designed to be used with diapers.

• Children’s car seats, provided they meet Canadian safety standards and are not part of a stroller/carrier travel system.

Specialized items of clothing — including wetsuits, soccer cleats, bowling shoes, skates, ski boots and tap shoes — do not qualify.

Food and groceries

• Prepared foods such as sandwiches, salads, platters and pre-made meals.

• Snacks including chips, candy, baked goods, fruit-based snacks and granola bars.

• Energy bars, but only if they are considered to be food by Health Canada are not enhanced by protein, caffeine, vitamins and/or minerals and meets other qualifications.

• Gift baskets, as long as at least 90 per cent of the contents are qualifying food or beverage items.

• Prepared meals and beverages, including delivery, but only when the food establishment delivers the meal.

• Prepared meals delivered by a third party (the delivery cost is not tax-exempt).

Restaurant meals and drinks

• Meals purchased at pubs, bars, food trucks or other places serving food and beverages.

• Mixed drinks served in restaurants and bars if they are qualifying beverages — sparkling wine and orange juice qualify, but a vodka and soda does not.

• Tips paid on meals and drinks, but only if they are included in the bill.

• Catering services that provide qualifying food and beverages.

Beverages

• All non-alcoholic drinks, such as coffee, tea, carbonated drinks, juices and smoothies, provided they aren’t sold through a vending machine.

• Alcoholic beverages such as beer, wine, cider and sake, so long as the alcohol volume is 22.9 per cent or less.

• Spirit mixed coolers and premixed alcoholic beverages with an alcohol volume of seven per cent or less.

• Energy and protein shakes, provided they aren’t enhanced with protein, caffeine, vitamins and/or minerals, and provided Health Canada considers them to be a food or beverage.

Books, magazines and newspapers

• Most published books, including guide books and audio books.

• Bound or unbound printed versions of scripture associated with any religion.

• Magazines and periodicals bought with a subscription which have no more than five per cent of their printed space devoted to advertising.

• Newspapers that contain news stories, editorials, features, or other information of interest to the general public and are published daily, weekly or monthly.

E-books and downloadable audio books do not qualify. Neither do books to write in, such as diaries, notebooks and agendas, and electronic and digital publications.

The tax holiday is expected to offer financial relief during the holiday season and into the new year, allowing consumers to stretch their budgets further. “This initiative provides tangible support for families and businesses while stimulating economic activity,” a government spokesperson noted.

With this temporary measure in place, Canadians are encouraged to take full advantage of the savings on qualifying goods. As the program unfolds, shoppers and businesses alike will experience the benefits of this targeted financial relief.