The federal government has now released a bill with proposed legislation to enact this upcoming tax holiday that clarifies many aspects of this temporary measure. Wholesalers, manufacturers, distributors, retailers, restaurants, grocers, online marketplaces and food delivery businesses, among other businesses, are expected to be affected by the GST/HST holiday, which is planned to begin on December 14, 2024 and end on February 15, 2025. Importantly, the proposed legislation provides further details on which goods may qualify for the tax relief, and confirms that these goods will be temporarily considered “zero-rated” (rather than tax exempt) which will allow affected businesses to continue to claim eligible input tax credits (ITCs).
Affected businesses should prepare updates to their systems to reflect the new proposed legislation. Businesses need to ensure that they correctly identify qualifying goods, and related rules, to mitigate the risk that they could be liable for uncollected GST/HST. In addition, many employers should also prepare to adjust their employee travel and entertainment expense reimbursement systems since the proposed tax holiday may affect certain expenses on employees’ expense accounts (e.g., restaurant expenses).
Download this edition of the TaxNewsFlash to learn more.
