As the holiday season approaches, Canadian consumers have two reasons to celebrate: the GST Holiday and the $250 Working Canadians Rebate. Starting December 14, 2024, the federal government is introducing a temporary GST/HST exemption on various essential items, allowing Canadians to enjoy tax-free shopping on groceries, children’s clothing, and more.
This GST Holiday will last until February 15, 2025, providing significant savings during the festive period and beyond.
In addition to this tax break, eligible working Canadians can look forward to receiving a $250 cheque in early spring 2025.
Let’s dive in!
What is the GST Holiday?
The GST holiday is a temporary suspension of the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on specific items during a limited time period between December 14, 2024 and February 15, 2025. During this period, consumers can enjoy tax-free purchases on a variety of goods, potentially saving hundreds of dollars.
What Items Are Included in the GST Holiday Rebate
The tax break applies to several categories of goods:
- Prepared foods and restaurant meals
- Children’s clothing and shoes
- Diapers
- Children’s car seats and toys
- Books
- Christmas trees
For a detailed list, please refer to the CRA link here.
How Businesses Will Implement the GST Holiday
Retailers and service providers are expected to remove the GST/HST on qualifying goods at the point of sale starting December 14, 2024. The tax relief will apply to:
- Goods delivered and paid for during the relief period
- Qualifying goods imported between December 14, 2024, and February 15, 2025
If you are a business owner and sell on a third party platform, such as Shopify or Amazon, you must enquire with them if this will be an automatic process or something you will need to do manually.
If you use a third party or a custom POS system in your store, work with the POS manufacturer to ensure the GST/HST rates during the GST holiday period are adjusted accordingly.
If you manually invoice from an accounting software for the applicable goods during the GST Holiday period, they you must manually remove the GST/HST from your invoice during the period.
GST189 Rebate Form: What to Do If You’re Incorrectly Charged GST
While businesses are expected to implement the GST holiday correctly, there may be instances where consumers are mistakenly charged GST during this period. If this happens to you, you can file for a rebate using Form GST189, the General Application for GST/HST Rebates.
How to Fill Out Form GST189 For The GST Holiday Period
- Obtain the form: You can download Form GST189 from CRA website.
- Complete the required sections:
- Part A: Fill in your identification details
- Part B: Use reason code 1C (Amounts paid in error)
- Part C: Provide details of your rebate application
- Part E: Sign the certification
- Provide supporting documentation: Include original receipts showing the incorrect GST charge during the GST holiday period.
- Submit your application: Mail your completed form and supporting documents to: Summerside Tax Centre
275 Pope Road
Summerside PE C1N 6A2
Important Notes on GST189 Rebate Claims
- You have up to four years from the date of the incorrect charge to file your rebate claim.
- Ensure all information is accurate and complete to avoid delays in processing.
- Keep copies of all submitted documents for your records. The CRA will not return any receipts or supporting documents.
- Do not send your credit card or bank statements. That is not sufficient proof of purchase. You will need to provide source bills and receipts.
Further guidance on the rebate process is in the RC4033 Guide available on this CRA link.
$250 Rebate for Working Canadians
In addition to the GST Holiday, a one-time $250 tax-free payment has been announced for eligible working Canadians. This rebate is designed to help offset rising living costs and complement the GST/HST holiday initiative.
Eligibility Criteria
- To qualify for the $250 CRA rebate, individuals must meet the following criteria:
- Be a Canadian resident for tax purposes
- Have worked in Canada during the 2023 tax year
- Have earned $150,000 or less in total income for 2023
- Have filed a 2023 tax return
Payment Timeline
The CRA plans to distribute these payments starting in the spring of 2025. The exact date may vary depending on individual circumstances and the processing of tax returns.
How to Receive the Payment
- Direct Deposit: If you’re already set up for direct deposit with the CRA, you’ll receive the payment automatically in your bank account.
- Cheque: If you haven’t registered for direct deposit, a cheque will be mailed to your address on file with the CRA.
Important Notes
- No Application Required: Eligible individuals do not need to apply separately for this rebate. The CRA will use information from your 2023 tax return to determine eligibility and process the payment.
- Tax-Free Status: This $250 payment is tax-free, meaning you won’t need to report it as income on your next tax return.
- Update Your Information: Ensure your address and direct deposit information are up to date with the CRA to avoid any delays in receiving your payment.
Conclusion
While the GST holiday presents an opportunity for Canadian consumers to save money on essential purchases, it comes with its fair share of additional burden on businesses to administer this process for the government.
Most small businesses do not have the resources (humans and systems) to administer such short term changes. Regardless, they must put their best step forward to adhere to the rules during this GST Holiday period.
Form GST189 is a welcome process to provide a second opportunity to the consumers to get their GST back if the business continued to charge GST during the holiday period when they were not supposed to.
Are you a business and looking for a GST/HST consultation? Reach out to our Tax Team here.