Temporary Tax Exemption on Holiday Essentials Announced

The Canadian government has announced that Bill C-78, known as the Tax Break for All Canadians Act, has received Royal Assent. This legislation will temporarily remove the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on certain holiday essentials. The tax exemption will be in effect from December 14, 2024, to February 15, 2025.

The items that will be tax-free during this period include:

• Prepared foods such as vegetable trays, pre-made meals, and sandwiches

• Restaurant meals, including dine-in, takeout, and delivery

• Snacks like chips, candy, and granola bars

• Alcoholic beverages including beer, wine, cider, and pre-mixed drinks with less than 7% alcohol by volume

• Children's clothing, footwear, car seats, and diapers

• Children's toys, including board games and video game consoles

• Books, print newspapers, and puzzles

• Christmas trees and similar decorative items

The government estimates that this measure will provide approximately $1.6 billion in federal tax relief. For example, a family spending $2,000 on qualifying goods could save up to $100 in GST. In provinces where the HST is also removed, such as Ontario, the savings could be as much as $260 for the same amount of spending.