The Canadian government has decided to play Santa Claus early by offering a tax holiday on a list of "essential" products from December 14, 2024 to February 15, 2025.

Between GST-free Christmas trees and administrative headaches, this initiative is both a relief for your customers and a potential challenge for you, the heroes of T4s and RL-1s.

But the killer question is: how can you make the most of this period, while avoiding crying over your tax return?

Family Guy Stewie GIF from Family Guy GIFs

First, what is exempt, and why we love it (or not)

For two months, certain products will be exempt from GST/HST, such as:

• Prepared meals : Vegetable platters, salads, sandwiches… perfect for impressing your employees at the Christmas party or for surviving your own end-of-year rushes.
• Snacks and candy : Potato chips almost become a professional tool if they fuel your brainstorming.
• Light alcoholic beverages : Less than 7% alcohol, they are exempt. Sorry for the 15 year old scotch, it is still taxable.
• Children's products : Toys, clothes, game consoles. Ideal if you want to equip your little ones so that they can leave you to work in peace.
• Christmas decorations : Your office will look festive for less, and that's almost a personal victory.
  
  

In short, it's a party for consumers. But what about entrepreneurs like you who sell these products or have to manage this exemption?

The poisoned gift:

A tax holiday is cool, but it makes life a little more complicated on the accounting side.

Here's what you need to know to navigate this joyful mess with confidence:

1. Billing, a crucial step

If you sell exempt products during this period:

• Do not charge taxes on these items. Your invoice must show 0% GST/HST on the products in question. If you mix taxable and non-taxable items on the same invoice, break down the amounts clearly.
• Your invoicing software is your best friend. Make sure it’s up to date and applying the exemption correctly. If you’re invoicing manually… good luck.

2. Your GST/HST returns: zen, but rigorous

During this period, exempt sales do not generate GST/HST to remit, but they must still be accounted for :

• Separate your sales. Break down your taxable and non-taxable products in your accounting records. Software like QuickBooks should make this easier. If you're still in the Excel spreadsheet era, make sure you're accurate.
• Input tax credits (ITCs). Even if you don’t charge GST on exempt goods, you can still get back the GST you paid on your purchases of those goods. For example, the sandwiches you bought for your coffee shop are still eligible for a refund.

3. Return to fiscal reality from February 16

Please note : As of February 16, all exempt products will become taxable again. Be sure to update your systems to avoid selling a taxable tree at zero tax.

A tax gift, but not without effort

This tax holiday is a bit like receiving a puzzle as a gift: it's fun, not if there are missing pieces and you don't have a picture to help you figure it out.

Between invoice adjustments, tracking inputs and reporting GST/HST, it pays to stay organized.

Fortunately, with a lot of rigor, everything should go well.

Come on, courage, and happy holidays (taxable or not)!