GST waiver adds pressure to businesses, forcing costly updates as retailers navigate busy holiday season
Canadian businesses are preparing for a temporary GST waiver announced by the federal government that will affect certain toys, takeout meals, and other goods sold between December 14 and February 15.
The implementation comes during the busiest retail season, leaving businesses scrambling to adapt their systems and operations.
According to BNN Bloomberg, many businesses are finding the process far more complex than anticipated.
Retailers are culling through their product lists to determine which items qualify for GST relief under the proposed legislation.
For example, printed books are eligible, but colouring books, sticker books, and coin books are excluded. Similarly, magazines qualify only when purchased through a subscription, not individually.
Michelle Wasylyshen, president and CEO of Ontario Craft Wineries, described the situation as “a nightmare for independent businesses, including our winery members.”
The Canadian Federation of Independent Business (CFIB) surveyed 2,500 small firms and found that 75 percent believe the changes will be “costly and complicated,” estimating a median of $1,000 in additional expenses for reprogramming systems.
Much of this work involves point-of-sale systems, which apply taxes during transactions.
Eric Lefebvre, CEO of MTY Group, a Quebec-based company with dozens of restaurant brands, said, “It’s creating a real disaster when it comes to programming all our cash registers with the short amount of time in front of us.”
Lefebvre’s company, which operates 15 different point-of-sale systems due to acquisitions, faces significant challenges. While newer systems may take a few hours to reprogram, older systems require programming at each store.
“Our franchisees are not IT specialists, so how we achieve that and get everything done at the same time is going to be a real challenge,” Lefebvre added.
In addition to updating point-of-sale software, businesses must reprint price lists and replace item tags or labels on store shelves.
According to CFIB, 65 percent of surveyed companies feel there is insufficient time to complete these tasks.
Dan Kelly, president of CFIB, noted that preparation coincides with major retail events such as Black Friday, Small Business Saturday, and Cyber Monday.
He called on the federal government to compensate small businesses for related expenses, estimating $1,000 per firm would cover programming and administrative costs.
Kelly also urged the Canada Revenue Agency to waive penalties and interest for “good faith errors” made during the rushed implementation.
Despite these logistical hurdles, some see the tax relief as an opportunity.
Wasylyshen acknowledged the challenges for wineries but stated, “At the end of the day, the logistics are our problem, not the consumer’s. If we sell more Ontario VQA wine because of this tax pause, it’s something to be celebrated.”
As businesses work to meet the December 14 deadline, they continue navigating operational complexities to ensure compliance while keeping consumer needs at the forefront.
