The Canadian government is promoting the GST/HST holiday as a great way to help families save this holiday season. From December 14, 2024, to February 15, 2025, many everyday items including:
- Children’s clothing and footwear
- Children’s diapers, car seats, toys, jigsaw puzzles, video game consoles, controllers, and physical video games
- Physical books and Printed newspapers
- Christmas and similar decorative trees
- Food and beverages and related services (Alcoholic beverages, candies, chips, popsicles, fruit bars, cakes, restaurants bills, etc.)
will be temporarily exempt from GST and HST.
But how much will you actually save? Let’s take a closer look.
How Much Can You Save?
Here’s the reality: most of your grocery bill is already tax-free. Basic groceries like bread, milk, and vegetables are zero-rated, meaning no GST/HST is charged on them. The tax savings only apply to taxable items like prepared sandwiches, frozen meals, or chips.
Example:
If you spend $300 on groceries, with $30 going toward taxable items like snacks and frozen pizza, you’d normally pay around $3.90 in tax (13% in Ontario). During the GST holiday, you save that $3.90—not the full $300.
For dining out, the savings are more noticeable. A $50 restaurant bill saves you $6.50 in Ontario. If you dine out twice a week, that’s $52 saved over two months.
At the end of the day, while the savings can add up, they’re not as significant as the marketing suggests. For most families, the holiday might mean $50 to $150 in savings—not a life-changing amount.
Tips to Make the Most of the GST/HST Holiday
- Stock Up on Taxable Groceries: Take advantage of the tax break to buy prepared foods like snacks, frozen meals, and desserts that usually have GST/HST added.
- Plan Restaurant Visits: Save on dining out by scheduling family dinners, takeout nights, or holiday gatherings during the tax-free period.
- Buy Alcohol for Business Gifts: If you’re a business owner, this is the perfect time to stock up on alcohol for client gifts. Normally, only 50% of the HST on alcohol is recoverable, but during this period, you avoid the tax entirely—doubling your savings.
- Skip Gift Cards: Gift cards aren’t included in the holiday since no GST/HST is charged on them to begin with. Instead, focus on physical goods like toys, holiday decorations, or children’s clothing, which qualify for the tax break.
Conclusion: A Nice Gesture, Not a Game-Changer
The GST/HST holiday is a thoughtful way to save a little extra during the holiday season, but it’s not the huge financial boost the government has marketed. For most Canadians, the savings are small and limited to taxable items you were already planning to buy.
If you want to make the most of it, focus on prepared foods, dining out, and business-related purchases like alcohol gifts. Every dollar counts, but don’t let the hype make you spend more than you need!
Until next time, happy Canadian Real Estate Investing.
Cherry Chan, CPA, CA
Your Real Estate Accountant
