GST holiday headaches Biz owners taxed by tight deadline to remove five per cent levy By: Scott Billeck Posted: 5:19 PM CST Wednesday, Dec. 11, 2024

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This article was published 11/12/2024 (574 days ago), so information in it may no longer be current.

Kari England hopes she’ll get a few hours of shut-eye on Friday night, but the owner of Toad Hall Toys knows she’ll be lucky if that’s the case.

England has to adjust the point-of-sale system at the popular toy and hobby store after it closes Friday and before it opens Saturday. She has to manually change the tax status of more than 400 items — one by one — to remove the GST. It’s to meet requirements by the federal government as it ushers in its plan to lift the GST on a slew of items for the holiday shopping seasons as of Saturday.

“It’s another layer of complexity added onto the busiest time of the year, added onto other problems like the Canada Post strike,” England said. “It feels like every corner has an added degree of difficulty.”

Toad Hall Toys sells a number of products, including toys and games that are exempt, and others such as hobby items that aren’t. The shop is especially affected by the lifting of the five per cent levy for a two-month period.

England’s worries don’t end with the transition to the GST exemption or a sleepless Friday night.

She’s anxious about sales that will have taken place before the exemption kicks in that are potentially returned during the exemption period, and vice-versa, when her tax codes are still changed for the holiday.

“They’re asking me to do this at a time where I don’t have time, and get it completely right on the arbitrary rules (the federal government) has set up,” England said.

Saturday will also be one of the two busiest shopping days of the year for Toad Hall Toys.

“The pressure’s on,” England said.

At Cobra Collectibles, co-owner and manager Kailyn Gregorash, said Wednesday they’re in a pickle as they try to figure out what to do.

“We’ve been talking with our accountant to try and figure out what the correct course of action is,” she said. “I think a lot of people are confused and not really sure what to do or how to go about things.”

Cobra Collectibles specializes in vintage toys from the ‘70s, ‘80s and ‘90s, along with video games, comic books and other retro products.

Gregorash said it’s “a little overwhelming,” especially during their holiday prep.

“They’re asking me to do this at a time where I don’t have time, and get it completely right on the arbitrary rules (the federal government) has set up.”–Kari England

“It’s going to be interesting,” Gregorash said. “There’s just not a lot of communication, and it’s hard to figure out what we’re supposed to be doing. It’s hard to figure out qualifying goods.”

Gregorash said they will likely include the GST into item pricing and then sort out what they owe to the Canada Revenue Agency later.

“It’s not going to be fair for us,” she said. “Our customers are going come in expecting not to be charged (the GST). We don’t want anyone being hurt by that.”

Peter Fehr has similar concerns.

The owner of Love Local Manitoba, a company that began as an event and now has an online store and storefront at St. Vital mall that sells 600 Manitoba-made products, said the so-called holiday isn’t one at all.

“It’s complicated… it’s learning new systems and becoming a tax expert overnight,” Fehr said, adding that all the work they have to do now to change their systems will have to be done again in February when the GST holiday ends.

Fehr’s almost certain they won’t get the settings completely right in such a short time frame, and worries it could lead to negative customer interactions.

He’s also uneasy about the possible long-term implications.

“What happens if we get audited in the spring and we didn’t get it right and we have big penalties to pay?” Fehr said.

The Canadian Federation of Independent Business is lobbying the federal government to forgive any errors that are made in good faith.

“This affects small businesses the most, who don’t have massive tech departments, administrative departments,” said provincial director Brianna Solberg. “They are the ones that have to spend hours changing over their inventory themselves.”

Solberg said many small businesses are scrambling ahead of Saturday.

“To put it simply, it’s been a complete nightmare,” Solberg said.

A recent survey of CFIB members showed that just four per cent think sales will increase because of the tax break.

CFIB has also called on Ottawa to consider giving affected businesses a minimum of $1,000 credit in their GST account to cover administrative costs.

The Canada Revenue Agency has said it will take a practical approach to compliance by targeting businesses that “willfully and egregiously refuse to comply with the temporary measures.”

“Businesses who make reasonable efforts to comply with the legislation will not be the focus of our compliance actions,” a spokesperson said Wednesday.

The federal government announced the tax break in late November, saying it would help reduce costs for Canadians.

Ottawa suggests an average household savings of around $100 for a family that spends $2,000 on qualifying goods.

Richard Forbes, lead economist at the Conference Board of Canada, said its preliminary data suggests an average savings of $164 during the two-month window, although that number takes into account the Harmonized Sales Tax in certain provinces.

That average will be lower in Manitoba.

Forbes said businesses will have a tangible uptick in sales during the tax holiday, but it won’t lead to a significant difference overall.

“We will probably see a lot of consumers purchase things in that period and not after or before, so it’s just front-loading purchases in December and January rather than March,” he said.

scott.billeck@freepress.mb.ca