Time-consuming and complicated: Calgary retailers brace for federal GST holiday
CBC
With a federal two-month GST holiday set to start later this week, some Calgary businesses say a lack of communication has them worried they are about to face a logistical nightmare.
Pending Senate approval, the GST break will start on Dec. 14 and will run through Feb. 15, 2025. Under the exemption, essentially all foods in Canada will be tax-free. The tax break also applies to children's clothing and footwear, car seats and diapers.
Luz Arellano is the co-owner of Lil Soles Footwear in Market Mall.
She says the tax holiday is great for shoppers who are looking to save a bit of money, but it's difficult for a business like hers, which has already paid for the items they stock, and paid GST on those items.
"These shoes have been ordered almost one year ahead, so that way we are prepared for the season. We pay the GST in advance," she told CBC News.
"So, when we are asked to take that GST off the final purchase, we are losing five per cent of the cost of the shoe."
She says it still remains to be seen how she will recover that money, but assumes it will happen when she submits her final GST reports to the federal government.
Deborah Yedlin, the president and CEO of the Calgary Chamber of Commerce, agrees with Arellano that the GST holiday will be a nice break for consumers, but she says for retailers it's going to get complicated.
"It's going to disrupt their inventory systems, it's going to disrupt their accounting systems, they have to make sure that their IT systems can accept this holiday, so … the logistics are going to be a challenge," Yedlin told CBC News.
"I think that's the one piece that wasn't necessarily considered as deeply as it should have been."
Arellano expects the process of going through sales receipts and separating out the items that were exempted during the tax holiday is going to be extremely time-consuming and complicated.
"It's not like the customers just come in and buy one thing," she said.
She says it's also going to be difficult making sure her employees know which items will now be exempt from the tax and which won't.
Since the tax holiday only applies to children's shoes, that means GST will still have to be charged on shoes above a certain size.
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