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Listed below are some questions that were raised by members—who we will not identify—and CFIG is providing the question and answer that was provided to us by the Department of Finance. This page will be updated as more questions come in.
Dec. 6/24: Updated Q&A with additional questions.
There are only a few days before the GST-HST holiday tax exemption takes effect on December 14th, ending on February 15th, 2025. Hopefully CFIG members will avail themselves of the opportunity to participate in the CRA information session on Monday, December 9th. Details were provided in the earlier eblast message to members.
There were some additional questions submitted to CFIG from members. The response of the senior CRA official assigned to CFIG are provided below. Again, basically the approach the government is taking is that anything suitable for human consumption, is exempt.
Dec. 5/24: This is the third update we are providing our members with respect to the GST-HST tax relief for consumers legislation, that was passed by the House of Commons this week. Again, CFIG wanted to ensure the answers to the questions you asked, were provided to us, in writing, by the government. We do not identify who asked the questions.
A couple of additional responses to questions have been received from the Department of Finance. We are endeavouring to have questions answered as expeditiously as possible. Bearing in mind the officials responding are also the ones currently working on drafting the enabling GST/HST tax holiday legislation for Parliament.
As you may be aware, there is a lot of political jockeying taking place amongst the 4 major parties with respect to the tax holiday and benefit cheque announcement by the government. There have been threats by the opposition to vote against the tax measures if enhancements to the $250 working Canadian benefit cheques are not made.
CFIG cannot predict what the outcome of those negotiations will be. Accordingly, we believe our best course of action is to assume the tax relief measures will be passed and to prepare our members as best we can for that likelihood.
Q: Do snacks include pretzels, nuts, seeds, popcorn and corn chips?
A: Yes, all food that is suitable for human consumption other than foods sold through a vending machine or food that includes cannabis, is included in the GST/HST relief exemption.
Q: ‘To go’ coffee, tea and prepared meals—consist of GST applicable items like packaging, cups, lids, take-out bowls, napkins, single packet condiments and utensils. How do we recoup the GST paid out for these items?
A: As a GST/HST registered business, who would normally claim ITCs in respect of these items on their GST/HST return, they will continue to claim ITCs for any GST/HST that was paid at any point through the usual process of filing their GST/HST returns.
Q: Is a chocolate bar considered candy?
A: Yes, all food that is suitable for human consumption other than foods sold through a vending machine or food that includes cannabis, is included int eh GST/HST relief exemption.
Q: I read the list of products—it says Granola products and snack mixtures that contain cereals, nuts, seeds, dried fruit, or other edible products. But is this inclusive of granola bars, or is it just granola cereal? The beverage one—it says carbonated beverages, non-carbonated fruit juice or fruit flavoured beverages or products, that when added to water, produce one of these beverages. But does that include refrigerated juice?
A: The answer is that all of these products qualify for the zero-rating.
Q: Are vitamins included in the GST-HST exemptions?
A: No, they are not scoped in to the products exempted.
Q: Are single-serve drinks included?
A: Yes, they are scoped in to the exemption.
Q: Are energy bars exempt?
A: They are included in the exemption. Unless a particular bar may be considered to be a dietary supplement. This is based on the labelling, packaging and marketing of the product. In these circumstances, the energy bar is not considered to qualify for the GST/HST relief as it is not considered to be food for GST/HST purposes. Businesses selling such items have always been required to make this determination regarding the treatment of these products, accordingly this determination is not due to the GST/HST tax break.
Q: With respect to Christmas and similar decorative trees. Does this mean the exemption is only for full size but/live or artificial trees with the sole intention of use for Christmas? Or does it extend to live potted shrubs, evergreens etc.?”
A: Christmas trees or similar decorative trees, whether natural or artificial, qualify for zero-rated treatment. Christmas trees and items sold or marketed as such during the holiday season are also zero-rated. An example of a similar decorative tree would be a Hanukkah bush. The zero-rating does not extend to live potted shrubs, evergreens etc.
Q: Does the exemption include small live Christmas trees (such as Grinch trees/other small decorative trees.
A: Yes. They are exempt.
Q: Does the exemption include live/cut arrangements which feature evergreen type foliage.
A: No. The exemption does not apply.
Q: Are non-alcoholic beverages—such as a 0% gin and tonic—exempt from GST as well?
A: Yes, these beverages are scoped in to the exemption.
Q: With respect to carbonated beverages, there is a GST on the environmental recycling fee attached to all recyclable containers in our province. Is the GST to be removed from this fee?
A: No, the GST will not be removed from that fee.
Q: In order to qualify for the GST/HST holiday, amounts need to be paid in full. This is simple enough when a consumer makes a purchase from a retailer. But what about when supply chain companies sell to each other and grant payment terms, for example 30 net, 60 net—Do we not charge initially and only if they have not paid by February 15th we should then send our customer a GST/HST invoice?
A: “This question is a business decision and every business needs to make all efforts to properly comply with the legislation. Based on the legislation, where a supplier has provided a supply that is relieved of the GST/HST on the basis that it was expected to fall within the relief period, however it did not due to not meeting either the payment date requirement or the delivery date requirement, then the supplier should take the necessary steps to recognize the correct GST/HST treatment with respect to that transaction.” CFIG note: In testimony this week before the Senate Committee reviewing this legislation, one association said their legal advice received was that Payment and delivery must take place within the tax exemption period to qualify.
Q: How does the GST/HST tax break for consumers work for the individual businesses that have already purchased these items with taxes? Are the businesses going to get back the taxes that they are going to be losing on sales?
A: The new relief temporarily zero-rates the qualifying goods. So input tax credit may still be claimed even if no GST/HST is charged to customers.
A question from an associate CFIG member from the supplier community:
Q. We import goods covered by the proposed GST/HST tax holiday and sell to retailers. We do not sell to consumers. Do we continue to charge retailers GST/HST?
A similar themed question from a CFIG retail member:
Q. Does the GST/HST tax holiday apply across the supply chain?
A. “Yes. The GST-HST holiday will apply to all sales and importations of qualifying goods throughout the supply chain, including sales or importations by producers or distributors. For example, grocers will not be charged GST/HST by their suppliers for qualifying goods within the 2-month period.”
Q. Will HST still apply to other taxes directly related to temporarily GST/HST exempt grocery items, such as the MMSB (bottle deposit) on drinks or the Sugar-Sweetened Beverage Tax (or similar) which are both GST/HST applicable items?
A. The GST/HST will be relieved on qualifying goods during the relief period even if they are subject to other taxes, duties or fees. The application of the GST/HST to these other taxes, duties or fees, as well as on returnable containers, may be fact-specific. As such for further information on the application of the GST/HST to particular products and services (including related taxes, duties or fees) business stakeholders may wish to contact the CRA directly at 1-800-959-5525.
*CFIG has also been advised that the Canada Revenue Agency as a priority, is working on producing and publishing a guidance document for businesses on the GST/HST tax holiday. As soon as that document is ‘live’, it will be provided to CFIG and distributed to our members.
Q. In provinces that have harmonized their tax to HST, is the full HST being removed?
A. Yes. For HST provinces, the full HST is removed.
Q. So how do I get the GST/HST back on product that I have paid tax on, that is on my shelves? In particular beer, wine and cider?
A. The new tax relief temporarily zero-rates qualifying goods. So input tax credit may still be claimed even if no GST/HST is charged to consumers.
Q. It appears that the alcohol tax will only be coming off products with less than 7% alcohol. That means the vast majority of wine and some beer and cider, will be subject to the full 13% HST. Correct?
A. No. All beer and all wine will be HST exempt. Only pre-mixed alcohols must be under 7% ABV.
Q. I saw carbonated drinks are exempt. But are energy drinks?
A. Yes, energy drinks are included in the tax relief measure.
Q. Why does the backgrounder say ‘proposed’ tax measure. Is this happening or not?
A. This answer from CFIG. All government news releases and backgrounders that relate to taxation measures, can only say proposed until such time as Parliament has passed the enabling legislation. This is a protocol based on British parliamentary rules that dates back to 1867. The government has said they are “very confident” this measure will pass Parliament. At this time, the NDP has publicly said they will support GST-HST tax exemption period. No indication yet from the Conservatives or the Bloc Quebecois as to their position.
