Trudeau government and NDP pause GST/HST for 2 month tax break on select products

November 21, 2024 – The federal Liberal government with the support of the NDP is pausing the 5% Goods and Services Tax (GST)/Harmonized Sales Tax (HST) for 2 months starting December 14, 2024 to February 15, 2025 on certain categories of products (see below).

Amount

The sales tax pause is expected to provide a total of $1.6B in federal tax relief (forgoing $1.6B in federal revenues).

HST will not be charged on eligible purchases in:

• Ontario (13%)
• Newfoundland and Labrador (15%)
• Nova Scotia (15%)
• New Brunswick (15%)
• Prince Edward Island (15%)

$2,000 in qualifying purchases will realize HST savings of $260.

5% GST will not be charged on eligible purchases in:

• Alberta
• British Columbia
• Manitoba
• Northwest Territories
• Nunavut
• Quebec
• Saskatchewan
• Yukon

$2,000 in qualifying purchases will realize HST savings of $100.

Businesses are expected to remove the GST/HST on qualifying goods at checkout as of December 14, 2024.

Trudeau previously spoke out against the idea of delivering rebates to address affordability, as he argued it could drive up inflation.

One of the fundamental challenges around affordability is they would love to say, ‘Well, you know what? We just need more money. Can you send us more benefits or send us an extra thousand dollars a month?’ As soon as you do that, inflation goes up by exactly that amount.

Prime Minister Justin Trudeau, May 2024

But now that inflation is back to around the Bank of Canada’s target rate of 2% per year:

It allows us to make sure that we are putting money in people’s pockets in a way that is not going to stimulate inflation, but is going to help them make ends meet and continue our economic growth

Prime Minister Justin Trudeau

Eligible products

Christmas trees, alcohol, chips, candy and video games and more.

• Children’s clothing: meaning garments (other than garments of a class that are used exclusively in sports or recreational activities, costumes, children’s diapers, or children’s footwear) that are:
  • Designed for babies, including baby bibs, bunting blankets and receiving blankets;
  • Children’s garments up to girls size 16 or boys size 20, according to the national standard applicable to the garments, and if no national standard applies to the children’s garments, girls or boys sizes extra small, small, medium, or large; or,
  • Hosiery or stretchy socks, hats, ties, scarves, belts, suspenders, or mittens and gloves in sizes and styles designed for children or babies.
• Children’s footwear: meaning footwear (other than stockings, socks or similar footwear or footwear of a class that is used exclusively in sports or recreational activities) that is designed for babies or children and has an insole length of 24.25 centimetres or less.
• Children’s diapers: meaning a product designed for babies or children and that is a diaper, a diaper insert or liner, a training pant, or a rubber pant designed for use in conjunction with any of those items.
• Children’s car seats: meaning a restraint system or booster seat that conforms to the Canada Motor Vehicle Safety Standard 213, 213.1, 213.2 or 213.5 under the Motor Vehicle Restraint Systems and Booster Seats Safety Regulations.
• Print newspapers: meaning print newspapers containing news, editorials, feature stories, or other information of interest to the general public that are published at regular intervals. They would not include electronic or digital publications. They would also exclude most fliers, inserts, magazines, periodicals, or shoppers.
• Printed books: including a printed book or an update of such a book, an audio recording where 90 per cent or more of it is a spoken reading of a printed book, or a bound or unbound printed version of scripture of any religion. However, they would not include:
  • a magazine or periodical purchased individually, not through a subscription;
  • a magazine or periodical in which the printed space devoted to advertising is more than 5 per cent of the total printed space;
  • a brochure or pamphlet; 
  • a sales catalogue, a price list or advertising material;
  • a warranty booklet or an owner’s manual;
  • a book designed primarily for writing on;
  • a colouring book or a book designed primarily for drawing on or for affixing or inserting items such as clippings, pictures, coins, stamps, or stickers;
  • a cut-out book or a press-out book;
  • a program relating to an event or performance;
  • an agenda, calendar, syllabus or timetable;
  • a directory, an assemblage of charts or an assemblage of street or road maps (other than a guidebook or an atlas that consists in whole or in part of maps other than street or road maps);
  • a rate book; or,
  • an assemblage of blueprints, patterns, or stencils.
• Christmas trees or similar decorative trees: whether natural or artificial.
• Food or beverages: items for human consumption that are:
  • Alcoholic beverages (excluding spirits but including wine, beer, ciders, and spirit coolers up to 7 per cent ABV);
  • Carbonated beverages, non-carbonated fruit juice or fruit flavoured beverages or products that, when added to water, produce one of these beverages;
  • Candies; confectionery classed as candy or goods sold as candies (e.g., candy floss, chewing gum, and chocolate); fruits, seeds, nuts or popcorn coated or treated with candy, chocolate, honey, molasses, sugar, syrup, or artificial sweeteners;
  • Chips, crisps, puffs, curls, or sticks (e.g., potato chips, corn chips, cheese puffs, potato sticks, bacon crisps, and cheese curls), popcorn, brittle pretzels, and salted nuts or seeds;
  • Granola products and snack mixtures that contain cereals, nuts, seeds, dried fruit, or other edible products;
  • Frozen desserts: ice lollies, juice bars, ice waters, ice cream, ice milk, sherbet, frozen yoghurt or frozen pudding, including non-dairy substitutes;
  • Fruit bars, rolls or drops or similar fruit-based snack foods;
  • Cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating (note that many bread products, such as bagels, English muffins, croissants, and bread rolls, are already zero-rated);
  • Pudding, including flavoured gelatine, mousse, flavoured whipped dessert product, or any other products similar to pudding;
  • Prepared foods: salads, sandwiches, platters of cheese, cold cuts, fruit or vegetables, and other arrangements of prepared food;
  • Food or beverages heated for consumption;
  • Beverages dispensed at the place where they are sold;
  • Catering: Food or beverages sold in conjunction with catering services;
  • Restaurants: Food or beverages sold at an establishment where all or substantially all of the food or beverages sold are currently excluded from zero-rating (e.g., a restaurant, coffee shop, take-out outlet, pub, mobile canteen, lunch counter, or concession stand); and
  • Bottled water or unbottled water that is dispensed at a permanent establishment of the supplier.
• Select children’s toys: a product that is designed for use by children under 14 years of age in learning or play and that is:
  • a board game or card game (e.g., a strategy board game, playing cards, or a matching/memory card game);
  • a toy that imitates another item (e.g., a doll house, a toy car or truck, a toy farm set, or an action figure);
  • a doll, plush toy or soft toy (e.g., a teddy bear); or,
  • a construction toy (e.g., building blocks, such as Lego, STEM assembly kits, or plasticine).
• Jigsaw puzzles, for all ages.
• Video-game consoles, controllers or physical game media (e.g., a video-game cartridge or disc).

Timeline

November 21, 2024 – Trudeau government announces pause of GST for 2 months from December 14, 2024 to February 2025

Past examples

In August 2021 the Conservative Party of Canada proposed a December GST (5%) holiday on retail purchases in response to cost of living increases as part of their 2021 election platform:

Critical reception

Restaurants Canada

Today’s announcement by the Prime Minister means that more Canadians will be able to celebrate with loved ones at a restaurant, have lunch with colleagues or treat themselves to a morning pastry on their way to work. We also appreciate that the relief will be extended over January, which is typically the lowest time of the year for our industry, and right through to Valentine’s Day

CEO of Restaurants Canada Kelly Higginson

Retail Council of Canada

Retail Council of Canada (RCC) welcomes today’s sales tax relief announcement from the federal government. The removal of GST and HST on a sizeable list of goods will create major tax savings for Canadians, along with economic stimulus for our industry, both in the holiday season and in the first six weeks of the new year, which is typically the slowest period of the year for retail.

While we would have preferred to see a broader range of goods included in the tax relief measures, having more money overall in consumers’ wallets should also benefit sellers of other goods not captured in today’s announcement.

Retail Council of Canada

Canadian Chamber of Commerce

We’re pleased to see recognition that the affordability crisis continues to hurt Canadians. This relief on everyday purchases is an important first step. But the root causes of Canada’s affordability challenges cannot be fixed with half-measures or temporary relief.

What’s still missing is a clear plan to revive our economy for all Canadians — one that empowers new businesses to launch, helps existing ones grow and create jobs, ensures major projects get built, and keeps supply chains running smoothly without constant disruptions and rising costs. It’s time to move away from tax-and-spend policies and red tape that drive up the cost of goods and services, and move towards an economy that creates opportunities for Canadians.

Jessica Brandon-Jepp, Senior Director, Fiscal and Financial Services Policy, Canadian Chamber of Commerce

Open Council commentary

The product categories that the sales tax holiday applies to seem to fall into 2 primary aims:

• provide relief to parents, particularly to help them through holiday season, and
• help Canadians eat, drink and be merry over the season to take their mind of the issues facing the country (ie. Bread and circuses)

Sales taxes are regressive, meaning low-income taxpayers pay a higher percentage of their income in taxes than high-income taxpayers. Low-income households tend to spend a higher proportion of their income on products that sales tax applies to. Cutting sales tax, even for a limited time, reduces the financial burden on these households, potentially narrowing income inequality.

The tax relief will stimulate Q4 2024 demand and pump retail purchases at a time when the inflation rate has settled back to 2%, economic activity has slowed, the economy continues to be in excess supply and GDP per capita is decreasing.