RCC Advocacy Secures Key GST-HST Tax Holiday Improvements for Retailers

RCC has held multiple discussions with the federal Department of Finance on the GST-HST holiday measures, with successful advocacy on several specific points listed below and more generally, persuading Finance and the Canada Revenue Agency to take a flexible, commonsense approach to putting the policy into practice.

Notably, Finance and CRA have largely solved what would have been a major design flaw in requiring the delivery of goods to be completed by February 15. We stressed that this requirement, if enforced rigidly, would have led to serious disparities between all-in pricing in e-commerce and in-store sales toward the end of the tax holiday, regional/remote/Northern disparities, and all manner of headaches with shipping method chosen, whether selected by the merchant or by consumers themselves – each with an inevitable count-back of days ahead of the Feb 15 deadline for tax free eligibility.

In consequence, CRA guidance issued yesterday following our suggestion to treat delivery as handover to shipping service, courier or post, so in essence, an item will be considered to have been delivered as soon as it is shipped. There is still work to be done with regard to the final day and on proprietary delivery methods but the system is much improved from the original announcement.

See: GST/HST holiday tax break

The government has also taken a fairly expansive approach to the children’s apparel/sportswear aspect, which could otherwise have been highly problematic. RCC stressed to the government that many items of sporting or recreational origin (ski jackets, sports jerseys, swimsuits, skateboarding shoes, etc.) are regularly worn as streetwear or activewear and should be eligible for the tax exemption, which CRA has now clarified as being the case.

We have also confirmed through discussions with provincial policymakers that the non-harmonized (i.e., non-HST) provinces: British Columbia, Saskatchewan, Manitoba and Quebec do not intend to follow suit by introducing parallel sales tax exemptions. To have done so would have led to a further complexity in making the temporary systems and labelling changes. The five harmonized HST provinces: Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland & Labrador are all working with the same tax base as the federal GST, so there is no added complexity – and of course Alberta and the three territories do not have their own sales taxes in place.

RCC knows that there are going to be many further questions that arise and we stand ready to obtain clarification on those points and to advocate for change or flexibility from CRA, as appropriate.