'It was a nightmare': Sask. business owner describes GST holiday challenges

Businesses in Saskatchewan are reporting mixed results after the two-month GST holiday ended on Saturday, with many reporting added costs for negligible increases in sales.

On Dec. 14 the federal government implemented the tax holiday on numerous consumer products like children's toys, some alcohol and newspapers. The program ran for two months, ending Feb. 15.

Peggy Hlushko owns Once Upon a Child in Regina, which sells used children's toys and clothing. Due to its unique business model where she buys and sells used clothing, calculating the altered taxes on both transactions quickly became unmanageable.

"It was a nightmare," she said. "It took me probably a day and a half just to try to get it set up to take the taxes off."

As Once Upon a Child is an American company, Hlushko says she didn't receive any support on how to handle the transfers. She relied instead on collaborating with Saskatchewan's other Once Upon a Child store owners.

"What we did we had to do ourselves and figure it out, and hope at the end of the day we did it right," she said. "And now even last night I went back in and had to take it off, reset all my taxes." 

"I'm still hoping that I got them to reset properly."

'An administrative nightmare'

Brianna Solberg from the Canadian Federation of Independent Businesses (CFIB) credited the federal government for its intentions with the tax holiday, but said it created an "administrative nightmare" for many small businesses. 

"We were taking hundreds of phone calls from business owners who were confused as to what they were obligated to do during this," she said. "Not to mention, we heard a lot of fear from business owners that at the end of this, if they didn't apply the tax correctly, then the CRA would be coming after them."

"Literally this created different tax categories that never existed before."

Solberg added that the government should have clarified sooner that the program was not mandatory. 

The GST holiday also only applied to some categories of goods like clothing and grocery store items, but even within those categories, many products were exempt. It was up to retailers to make those distinctions, and make sure taxes were collected correctly through their check out systems.

One example Solberg mentioned was toys. Toys were tax exempt under the holiday, but only those marketed specifically to children. That meant that for items like LEGO sets and puzzles, some were exempt, but others marketed toward adults were not.

In a survey of their members, the CFIB reported that only five per cent of small businesses saw strong sales compared to the same period the year before. Only four per cent of retail businesses reported increases, along with 15 per cent of hospitality businesses. 

The same survey found that 66 per cent of small businesses received the same amount of sales compared to the same period the year before, but did so dealing with challenges to reprogram their point-of-sale systems and train staff to deal with the holiday changes.

Mixed early results

Canada's inflation rate declined to 1.8 per cent in December, the most recent month with available data. According to Statistics Canada, food purchased from restaurants and alcoholic beverages — both items covered under the GST holiday — contributed the most to the deceleration.

Other reports were more mixed. The Royal Bank of Canada's Consumer Spending Tracker, which collects purchasing data from its cardholders, reported that spending on items included in the tax holiday declined by 0.3 per cent in January after increasing by 1 per cent in December.

Meanwhile, Canadian payments provider Moneris said people made fewer purchases between Dec. 14, 2024, and Jan. 15, 2025, compared to the same period a year earlier. Purchases at restaurants went down, but more transactions were made at children's clothing stores, according to the company.