GST and HST ‘holiday’ is here. What Canadians need to know

The Liberal government’s two-month GST and HST holiday began December 14, reducing the cost of some essential goods for Canadians.

In provinces that have merged their provincial sales tax with the GST, such as Ontario, where it’s the HST, the entire harmonized tax will be removed at the time of purchase. This will be in effect until Feb. 15, 2025.

Ontario, which stands to lose the most HST revenue, will not seek compensation from Ottawa.

Prime Minister Justin Trudeau announced the proposed affordability measures last month, saying a GST break that would apply to various items would begin in mid-December and last for about two months.

He also said the Liberal government will send $250 cheques to more than 18 million Canadians this spring to help ease affordability pressures.

The items that will be exempt from the GST/HST include but are not limited to, beer and wine, prepared foods, restaurant meals, non-alcoholic drinks, most children’s toys and clothing, diapers, video games, books and magazines, among other related products.

“Although inflation is down and our economy is strong, the cost of living remains a challenge for many middle-class Canadians,” said Minister of Public Services and Procurement Jean-Yves Duclos. “That is why the federal government is introducing a two-month tax break on groceries and everyday essentials.”

Many essential grocery items, like produce and milk, are already tax-free under Canada Revenue Agency (CRA) rules. While the tax break will cover taxed items like carbonated drinks, candies, snack foods, and alcoholic beverages, this could mean that higher-income households will gain the most from reduced sales tax benefits.

Federal government estimates suggest that someone spending $2,000 during the tax-free period could save between $100 and $300. The holiday tax break will cost the government an estimated $6.3 billion.