What Restaurants Need to Know About The GST Holiday

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    02 Jan 2025
    As a restaurant owner are you feeling overwhelmed or confused about how to navigate the new GST and HST tax holiday? In a significant move to support businesses and consumers, the Canadian government has announced a temporary Goods and Services Tax (GST) and Harmonized Sales Tax (HST) holiday. This initiative, effective from December 14, 2024, to February 15, 2025, aims to provide financial relief and boost economic activity.  Here's what restaurant owners in British Columbia (BC) need to know to prepare for this tax holiday.  

    What Does the GST/HST Holiday Cover?

    The GST/HST holiday applies to a range of items and services. For restaurants, the following are exempt from GST and HST during this period:
    • All food items.
    • Non-alcoholic beverages.
    • Alcoholic beverages, including beer, malt beverages, wine, cider, and sake with an ABV of up to 22.9%.
    • Pre-packaged coolers with an ABV of up to 7%.
    However, spirits and spirit-based cocktails made on-premises are excluded. This also applies to other taxable services like event admission fees and facility hosting fees. Banquet halls and event centers offering catering services can benefit from the exemption, but labour and rental costs remain taxable.  

    What About Delivery and Gift Cards?

    When food is delivered directly by the restaurant, the delivery charge is GST/HST exempt. However, delivery services provided by third-party platforms are not included in the tax relief. Additionally, while gift cards can be used to pay for meals during the holiday, customers buying gift cards during this period will not receive the tax exemption on purchases made after February 15, 2025.  

    Compliance Guidance for BC Businesses

    The Canada Revenue Agency (CRA) encourages all businesses to comply with this temporary legislation. Businesses that make reasonable efforts to adjust their systems will not face penalties, even if mistakes occur. However, the CRA will focus compliance efforts on businesses that willfully refuse to comply. To ensure smooth compliance:
    • Adjust your point-of-sale systems to reflect the tax exemption.
    • Inform your staff and customers about the temporary changes.
    • Keep clear records of transactions during this period.
    tax compliance during gst tax break Businesses in BC should also remember that the Provincial Sales Tax (PST) remains in effect unless the provincial government announces similar exemptions. Keeping this in mind will help businesses avoid confusion among customers.  

    Qualifying Items and Exemptions

    Items that qualify for GST/HST relief include:
    • Prepared meals and non-alcoholic beverages served at restaurants.
    • Alcoholic beverages such as beer, malt beverages, wine, cider, and sake with an ABV of up to 22.9%.
    • Pre-packaged coolers with an ABV of up to 7%.
    • Catering services for events, excluding labor and rental costs.
    • Food delivery directly handled by the restaurant (third-party delivery charges are excluded).
    To qualify, items must be paid for in full and delivered or made available to the buyer within the eligible period.  

    Avoiding GST/HST Errors

    Errors in charging GST/HST during this period can frustrate customers and create additional work for your team. To help you avoid and manage such situations:
    • Update Your Systems: Ensure your POS system reflects the tax exemptions accurately.
    • Train Your Team: Equip staff with the knowledge to handle GST/HST exemptions during the holiday period.
    • Review Transactions: Regularly check receipts to catch and correct errors promptly.
     

    How CJCPA Can Help Your Restaurant

    Navigating the GST/HST holiday can be tricky, but CJCPA is here to help. With our experience of supporting over 1,000 small businesses across British Columbia, we can help navigate the change. Since we specialize in restaurant accounting services. we’ll help you update your billing systems and ensure compliance with CRA guidelines. Our expert advice ensures you don’t miss out on any tax relief, and if you’re looking to simplify your finances, we also offer outsourced restaurant accounting services. business owner shaking hand with accountant

    Final Thoughts

    This temporary GST and HST holiday is an excellent opportunity for BC restaurants to connect with their communities and attract more customers. By making the necessary adjustments and staying informed, you can maximize the benefits of this initiative while supporting your patrons. For further assistance, feel free to contact us for professional advice personalized to your business needs in British Columbia. Let’s make the most of this tax holiday together!
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