FAQ: Holiday Tax Break for Food & Beverage Industry (Government of Canada)
The following FAQ is for Merchants who are not integrated to a POS.
Updated: December 11th, 2024. Added FAQ 14 & 15.
1. What is the Holiday Tax Break?
The Government of Canada has introduced a temporary tax break for specific food and beverage products. The tax break eliminates GST charges on prepared food items and certain categories such as packaged goods and under-7% alcohol products. This initiative applies to purchases made between December 14, 2024, and February 15, 2025
2. When will the tax break take effect?
The tax break will come into effect starting December 14, 2024 and end on February 15, 2025.
3. What tax categories are affected?
- Prepared Food - GST/HST will be reduced to 0% for applicable products, only PST will be charged.
- Soda Beverages - GST/HST will be reduced to 0% for applicable products, only PST will be charged.
- Packaged Goods (GST Exempt): GST/HST will be removed; only PST will be charged.
- Under 7% Alcohol: GST/HST will be removed; only PST will be charged.
4. What steps do I need to take as a client?
- Before December 10th:
- For Merchants with no POS integration: Update tax rates for your non-GST exempt packaged goods and above 7% ABV alcoholic products to align with the new tax categories.
- By December 14th Morning:
- For Merchant with POS integration:ensure that the POS has the updated tax rate to accommodate the tax break.
5. How do I assign the new tax categories to my products from Portal?
The new tax categories will appear in the Tax Category dropdown on the Product Detail page in your Portal. The new tax categories represent a way for Merchant's to continue to charge GST?HST on products that are not part of this tax exemption. Select the relevant category for each product:
- Taxed Packaged Goods
- Alcoholic Beverages Above 7%
6. Will I need to make any manual changes after December 14th?
No.
7. What happens if I don’t update my products by December 14th?
If the tax rates are not updated before December 14th, your products may charge incorrect taxes, leading to compliance issues or customer dissatisfaction.
8. Can I update my products after December 14th?Yes. There is nothing in the Smooth platform that will prevent you from making changes to your tax categories during this Holiday Tax Break period. However, any delays may lead to compliance issues or customer dissatisfaction.
9. What if I add a new product between December 14th and February 15th?You can add new products as normal, however you must select the relevant tax category. For example, if you are adding a merchandise item, you would select “Taxed Packaged Goods”. If you were adding a new food item such as a sandwich, you would select “Prepared Foods” .
10. Who can I contact for assistance?
Smooth Support at support@smooth.tech
11. Will the tax break be automatically reverted after it ends?
Yes, when the tax break period ends, Smooth will update the tax rates accordingly.
12. Will I need to make any manual changes after February 15th?
No. Smooth will revert the tax rate of non-tax exempt products to match their original tax categories.
13. Will the tax break apply only for in-store orders?
No, the tax break would apply to all types of orders including pick-up/take-out, delivery and in-store.
14. What about the December 11th update on wine under 22.9% ABV?
In regards to the governments update on December 11, 2024 to also include wine that is less than 22.9% ABV in the holiday tax break, you can utilize the same category we have created for alcohol above 7% for alcoholic products that will not be part of the tax exemption. For example, if you have any wine that is above 22.9%, please ensure it is updated to the new tax category of "Alcoholic Beverages over 7%" as this category represents alcohol that will have to be taxed. If you have any wine that is below 22.9%, you can leave it on "Alcoholic Beverages" category as this is the category that Smooth will use to update the applicable taxes (in this case no tax) automatically for you.15. Will this tax break impact the taxes on delivery charges?
No. Delivery charge tax will not be impacted.
*this item is currently under review. Please note, it is always the Merchant's responsibility to ensure they are tax compliant.