Waterloo businesses welcome GST/HST tax break but worry about audits
Federal government's GST holiday is kicking in Saturday
Two Waterloo businesses have welcomed the opportunity customers will have "to save some money" under the federal government's GST/HST two-month tax break, which go into effect on Saturday.
But it was "complicated" getting point-of-sale systems ready to implement the tax holiday, according to Jason Schill, owner of J&J Collectibles in Waterloo.
"The initial reaction is 'here's an opportunity to save some money,' [but] we've determined that with our over 20,000 [items] that we have, it's impossible for us to edit our system, so that means we're doing everything real time at the cash register when people come up," Schill told host Craig Norris on CBC Kitchener-Waterloo's The Morning Edition.
"So, that's where things really started to get complicated — what are the items that are exempt? How are we going to do it? We realized during some testing that it's going to double to triple our checkout time, so that's created some really difficult situations for us during the busy Christmas season."
Schill said employees have been going through "a lot of testing [and] a lot of training" to figure out "how we're going to implement this as smoothly as possible."
Everybody's looking for a break.- Philip Molto, Waterloo region resident
David Worsley, co-owner of Words Worth Books in Waterloo says things are "a little less complicated" given that they offer fewer individual items.
"For now at least the thinking is it's really pretty clear — books are exempt, calendars are not, puzzles are exempt, the Moleskine blank journals are not," Worsley said.
"We think that we're on pretty good footing at our [point-of-sale] system, we're able to just make those changes before the fact. It's a few keystrokes compared to J&J, it's not that big a deal."
The two-month tax break, announced on Nov. 21, applies to goods such as prepared foods and restaurant meals, children's clothing, diapers, footwear, car seats and toys, jigsaw puzzles, video game hardware, print books and newspapers, and Christmas trees. CBC News has a full breakdown here.
Nico Germanakos, a local resident, says while most of the items on the list don't apply to them, they've decided to wait for the tax break to purchase books.
"The food purchases at grocery stores aren't really the healthiest in my opinion. Maybe restaurants, perhaps, but otherwise not so much," Germanakos said.
"I have four nibblings, which are my nieces and nephews, and for children's books that I get them for Christmas, things like that, I'll definitely wait till Saturday or afterwards."
Philip Molto, another resident, welcomed the tax break.
"Everybody's looking for a break. For us, we've held back so much on purchases. We've become real minimalist in the last five, eight years with our kids… with the pricing and prices and taxes and stuff we've held off," Molto told CBC News.
"So, yeah, we'll be looking for tax breaks and kind of looking at what's on sale and what can we get [that's not] taxed this year.
"We'll soon be grandparents. I think for a lot of people, you start realizing the cost of children … having kids is so expensive. I think everybody's looking for tax breaks on children's items," Molto added.
Meanwhile, Schill said about 75 to 80 per cent of items at his business will be exempt, "which is great, great savings for everybody, so we love that."
'Is the government going to audit businesses?'
But Schill said Dec. 14 to 24 are already the busiest 11 days of the season, and with people waiting for the tax break days to do their shopping, this will result in additional strain for employees.
"We can't get more people in the store. We can't process more transactions, especially with now it's taking two to three times the amount of time to process. So we're kind of jammed up with that," Schill said. "In that sense it's not going to help us."
Both Schill and Worsley are worried about the aftermath of the tax holiday and whether businesses would be audited later.
"Is the government going to audit businesses to see if they've done it right? And then are those businesses at risk of being penalized? We don't know that, but it's a concern," he said.
"The main thing I'd like to see is a statement from the government saying that there are no ramifications for businesses."
Bill C-78, the legislation implementing the tax break, passed its third and final vote in the Senate and received royal assent on Thursday.
In order for an item to be sold tax-free between Dec. 14, 2024 and Feb. 15, 2025, it must be paid for in full and delivered by the end of the tax break period.
LISTEN | 2 local businesses weigh in on the tax holiday:
The federal government says that items will be considered delivered once they are transferred from a supplier to a shipping service, or when they are put in the mail, rather than when they arrive at their destination.
Shoppers do not need to do anything to get the tax break; there is no claims process. The GST or HST will simply not be charged at the time of purchase.
In provinces that have merged their provincial sales tax with the GST to create an harmonized sales tax (HST), the entire harmonized tax will be removed at the time of purchase.
Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island have harmonized sales taxes.
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With files from The Morning Edition, Josette Lafleur, Jenna Benchetrit and Peter Zimonjic