Update on Temporary GST/HST Relief and The Working Canadians Rebate

December 3, 2024

This article is an update from the previous one that summarized the two proposed tax break measures announced by the federal government of Canada on November 21, 2024.

On November 27, 2024, the federal government of Canada introduced Bill C-78, the Tax Break for All Canadians Act in Parliament. Bill C-78 contains the proposed enacting legislation for the temporary GST/HST relief on qualifying items that was announced on November 21, 2024. The $250 Working Canadians Rebate measure that was announced on the same day is currently on hold due to the lack of support from other political parties. At the time of writing, Bill C-78 has been approved by the House of Commons and is currently awaiting first reading in the Senate.

Shortly after Bill C-78 was introduced, the Canada Revenue Agency (CRA) has published some guidance on its website. Bill C-78 and the CRA guidance provide more clarity on how the temporary GST/HST relief is expected to apply, namely:

Timing of qualifying purchases
Scope of transactions within a supply chain
Input tax credits eligibility for GST/HST registrants
Details of qualifying items

Timing of qualifying purchases

For purchases of qualifying goods, they must meet the following two conditions to qualify for the temporary GST/HST relief:

Paid for in full between December 14, 2024 and February 15, 2025 and
Delivered or made available to the buyer between December 14, 2024 and February 15, 2025

As per the CRA guidance, deliveries to consumers are generally shipped on behalf of the seller and as a result, considered to be completed when the item arrives at the destination address. However, it could be deemed to be delivered at a different moment instead under certain circumstances.

It is worth noting that the CRA guidance does not address returns of goods purchased before the temporary relief period.

For purchases of qualifying services related to food and beverages (e.g. catering services), they must meet the following two conditions to qualify for the temporary GST/HST relief:

Paid for in full between December 14, 2024 and February 15, 2025 and
The service is rendered entirely between December 14, 2024 and February 15, 2025

Scope of transactions within a supply chain

This temporary GST/HST relief measure does not apply only to retail transactions as some may have thought based on the wording of the initial announcement. It would apply to every stage of a supply chain. All businesses that are included in such a supply chain should carefully consider how this measure could have an impact.

Details of qualifying items

The Appendix below reproduces the details of qualifying items as per the CRA guidance. Businesses such as retailers and marketplace facilitators should carefully review those items to ensure that consumers buying from them will benefit from the temporary GST/HST relief on qualifying purchases.

Input tax credits eligibility for GST/HST registrants

The temporary GST/HST relief on qualifying items is proposed to be done by zero-rating (i.e. taxing at 0%) such goods and services. The input tax credits eligibility for the GST/HST paid or payable by GST/HST registrants that supply such qualifying items is not intended to be affected by this temporary measure.

Please contact one of our indirect tax professionals if you would like to discuss how this proposed GST/HST temporary relief may impact you.

Appendix – CRA guidance on the types of items that qualify for the GST/HST holiday tax break (reproduced for convenience from the CRA website¹)

1: https://www.canada.ca/en/services/taxes/child-and-family-benefits/gst-hst-holiday-tax-break.html