GST/HST tax holiday: What you need to know
Restaurants Canada celebrated a major victory for the foodservice industry when the federal government announced a temporary GST and HST holiday on all restaurant meals, among other goods.
We want to be fully transparent with you: there was a real risk of restaurants being left out of the GST holiday. In fact, the initial NDP proposal for a GST holiday excluded our sector, which would have put restaurants at a major disadvantage compared to prepared foods from grocery stores; a significant competitor of restaurants. Our industry would not have been included if it wasn’t for the months of pressure, and impactful advocacy we have been putting on the federal government to provide real and meaningful relief to foodservice businesses. The inclusion of alcohol in the tax holiday was also not guaranteed and is a significant boon to our industry.
We’re thankful to the federal government for listening to Restaurants Canada and taking such meaningful action to support our industry
With the busy holiday period already underway, we know operators are scrambling to get ready. It’s important to note that the legislation for the tax holiday is being debated in the House of Commons right now and more information will be forthcoming from CRA once it passes into law. In the meantime, we have assembled a short list of Frequently Asked Questions about the GST and HST tax holiday.
The government has announced a list of items which will be exempt from Goods and Services Tax (GST) and the federal portion of Harmonized Sales Tax (HST) between December 14, 2024, and February 15, 2025. For restaurants, this includes all food, all non-alcoholic beverages, all beer, wine and cider, as well as bottled or canned pre-packaged coolers up to 7% ABV. Spirits and spirit-based cocktails made on premises are not included in the tax holiday. You can find a full list of exempt products here.
We are pushing provincial governments to follow the federal lead and exempt restaurant meals from their portion of sales taxes as well. Newfoundland and Labrador has already made that commitment.
Banquet halls and event centres: The meal portion of the bill is GST exempt, but the labour and rental costs are not.
Gift cards: Customers can use gift cards to pay for their meals during the GST and HST holiday. Customers who buy gift cards during the two months of the GST and HST holiday will not receive the tax exemption on meals purchased after the tax holiday ends.
Restaurants are facing low consumer demand. Canadians are eating out less as they struggle with affordability, as shown in our most recent React Survey. That is why Restaurants Canada has been urging the federal government for months to provide real cost relief to Canadians and restore consumer confidence to stimulate discretionary spending.
Restaurants Canada’s Chief Economist’s analysis shows the GST and HST holiday will serve as a strong incentive for price-conscious consumers to loosen their budgets during the two-month exemption period. This holiday season and into the slower winter months, they will have more discretionary income to go out to eat, order take-out or treat themselves to a pastry on the way to work. They may also order that extra dessert or drink they have been going without as we have all seen lowering of average cheques.
The GST holiday could lead to an increase in sales nearing $1B across the entire industry. For a restaurant with $1.5M in sales, that would equal an additional $5,700 in sales per month, or 5%.
Restaurants Canada has contacted the major POS providers to ask if they will be sharing special instructions with their clients in the coming days. As we receive their responses, we will add them to this GST and HST webpage. Our partner, TouchBistro, has assured us they are already reaching out to their users and are putting together a how-to guide. We advise you to contact your POS provider in the coming days to prepare for the exemptions.
The legislation for the GST and HST holiday still must be reviewed by Parliament and passed into law, which we expect to happen in the coming days. We will keep you informed of any updates as we know more.
