GST/HST Tax Break in Canada: Some Helpful Information for Businesses

The Canadian government has announced a GST/HST holiday, a temporary tax break designed to support consumers and stimulate spending. For a limited period, the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) will not be charged on eligible purchases, providing businesses with an opportunity to attract more customers and boost sales.

The GST/HST break may encourage Canadian shoppers and diners to spend more, but businesses should be prepared to apply the tax reduction.

We’ve laid out helpful information regarding the GST/HST holiday and how businesses can prepare for it in this blog:

• What is the GST/HST holiday tax break?
• What can the tax break do for businesses?
• How can businesses prepare for the GST/HST holiday?

What is the GST/HST holiday tax break?

Canada is temporarily zero-rating GST/HST on select goods and services.

For retailers and restaurants, this means that they won’t charge customers GST/HST on qualifying purchases during the eligible period, effectively lowering costs for consumers and encouraging them to spend more.

The GST/HST holiday is not just a consumer incentive—it’s a valuable opportunity for businesses to increase sales, clear inventory and attract new customers. By preparing your operations and promoting the tax break effectively, you can maximize the benefits of this temporary policy for your business.

When does the GST/HST holiday start?

The GST/HST tax holiday starts on December 14, 2024. It will run for two months, ending February 15, 2025.

What is included in the GST/HST holiday?

Canada’s GST/HST temporary holiday exemption typically applies to certain essential goods like qualifying food items and beverages, select children’s products, and certain household items. The government of Canada has provided a practical list of different eligible goods and services with examples.

What can the tax break do for businesses?

We won’t know the full effects of the temporary GST/HST holiday until after it’s over, but it may help businesses:

• Increase sales: lower prices can incentivize customers to spend more, potentially boosting your holiday sales
• Attract new customers: the GST/HST holiday might draw in price-conscious shoppers who wouldn’t normally visit your business

How can businesses prepare for the GST/HST holiday?

While the Canadian GST/HST holiday applies, businesses that sell eligible goods and services must adjust their point of sale systems to reflect the temporary tax exemption, in order for customers not to be charged GST/HST on eligible items. 

Lightspeed POS makes it easy to change your tax settings—you can make mass updates to your tax settings simply using a spreadsheet, then revert the settings on February 16, 2025 just as easily.

As not all items in every impacted category may be eligible, make sure to keep your staff informed about the changes to help them explain the tax break to customers confidently. 

The GST/HST holiday should help customers budget a little better—and businesses stand to benefit. 

Need a POS system that will help you take advantage of the GST/HST holiday? Talk to a Lightspeed expert today.

Disclaimer

Lightspeed Commerce Inc. (“Lightspeed”) does not provide tax, legal or accounting advice. This blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.