The holiday season is supposed to be a time for gingerbread cookies, festive cheer, and a much-needed break. But for small business owners, the only thing they might be getting this winter is a GST/HST winter break—and not necessarily in the “vacation” sense.
The Government of Canada has announced a proposed measure to provide GST/HST relief on certain items beginning December 14, 2024, and ending February 15, 2025. The proposed Federal Legislation has been passed by the House of Commons, but is awaiting approval from Senate before it will be enacted as law.
Sure, the idea sounds like a little holiday gift from the government- a temporary pause on remitting Goods and Services Tax (GST) and Harmonized Sales Tax (HST), but before you cozy up by the fire with a relaxing cup of hot cocoa, let’s unwrap this proposal a little more carefully.
This government “gift” might turn out to be more of a lump of coal than a shiny new present. Here’s why.
The Administrative Avalanche
It’s safe to say that small businesses aren’t exactly known for their lavish accounting departments (unless, of course, you count the coffee-stained receipts you file in a banker box). The thought of adding another layer of complexity to your already strained holiday accounting is enough to give anyone a headache.
Even if the GST/HST winter break is temporary, it will still require significant administrative updates to invoicing and reporting systems. If you’re a one-person operation or a small team, managing this adjustment could mean extra hours (or fees!) spent on bookkeeping and updating cash registers, POS systems and sales processes and possibly staff training and oversight.
You’ll need to track the taxes you’re not collecting and make sure you’re ready to file when the break ends. For many small businesses, the reality is that “simplifying” tax collection could turn into a full-blown accounting nightmare. Merry Christmas? Not quite.
Larger Businesses Might Get More Holiday Cheer (While Small Businesses Are Left in the Cold)
Here’s a fun twist on the holiday story: bigger businesses, with their shiny accounting teams and well-oiled financial machines, will likely get a lot more out of the winter tax break than the small guys. While large corporations have the resources to interpret which products are included in the legislation and the logistics of implementing these changes, small businesses are already working with limited time, money, and manpower.
For the little guy, these proposed changes don’t feel like a reprieve—they feel like yet another thing to keep track of. It’s like getting a coupon for a gift you didn’t want—suddenly, that “holiday gift” starts to feel a little less festive.
Confused Customers = Holiday Stress
Speaking of confusion, let’s talk about your customers. A temporary tax break could leave your customers scratching their heads. If you’re not collecting GST/HST on certain transactions during the break, it could cause confusion for those who expect consistent pricing across the board.
Do you update your prices to reflect the tax break? Do you advertise that customers won’t have to pay tax for a few weeks? Or do you just let the customer figure it out when they’re checking out? Either way, you’ll be adding a little more work to your plate when you should be focusing on customer service, not explaining tax policy.
What Should Small Businesses Do?
Alright, small business owners, if you’re starting to feel like this proposal is more of a holiday horror than a gift, here’s how you can stay ahead of the game:
- Stay Informed: Keep an eye out for any updates on the proposed winter break and how it might affect your business. Consult your accountant or bookkeeper—they’ll help you navigate the maze of tax changes (even if it’s the last thing you want to do over the holidays).
- Simplify Your Tax Systems: Look into accounting software that can automate tax remittance and help you stay on top of any changes. The more you can streamline now, the less stress you’ll have later.
- Be Patient (but Prepared): Do your research and due diligence so that you are ready to implement the necessary changes if the legislation is passed, but don’t jump the gun (and cross your fingers it’s a bust!)
Conclusion: Is the GST/HST Winter Break a Gift or a Grinch?
At first glance, the GST/HST winter break might seem like a little holiday cheer for small businesses. But when you unwrap it, you might find it’s more of a nuisance than a gift. With an overwhelming amount of added administrative headaches, this proposal could bring more stress than relief for many small business owners.
So, before you get too excited about that tax “break,” remember: sometimes the best gift for small businesses isn’t a temporary suspension of taxes—it’s consistent, predictable policies that help businesses thrive all year long. Now that’s something we could all toast to.
