A short lead time leaves big retailers rushing to prepare logistics
A two-month suspension of the federal Goods and Services Tax (GST) on select items is set to begin next month, with businesses across Canada preparing to navigate the logistical challenges it brings.
Starting December 14, Canadian shoppers will see a temporary break from paying GST on a wide range of items. Retailers are now assessing their inventory to identify qualifying products and updating point-of-sale (POS) systems to accommodate the tax holiday, which runs until February 15.
Although some businesses may find the adjustments straightforward, others could face significant challenges, particularly those with complex or expansive inventories.
“Every retailer is going to be different because everyone’s system is different, but it can range from being a simple fix to being quite laborious,” said Matt Poirier, vice president of federal government relations at the Retail Council of Canada.
After all, the list of items exempt from GST during the holiday is extensive, covering necessities like diapers and bottled water as well as less obvious products like plush dolls and newspapers. While this tax relief is intended to provide savings for consumers, it places the administrative burden on businesses as per John Oakey, vice president of taxation at the Chartered Professional Accountants of Canada.
Retailers also worry about the timing of the tax suspension, which starts after Black Friday and other major holiday shopping events. Dan Kelly, president of the Canadian Federation of Independent Business, voiced concerns from one retailer of children’s products who anticipates shoppers delaying or canceling purchases to take advantage of the GST savings.
On the other hand, some businesses view the tax break as a potential boost during the typically slow post-holiday period. For instance, restaurants expect decreased foot traffic in January and February.
“There’s less people going to restaurants at that point, so the timing is actually very good,” said Max Roy, vice president of federal and Quebec affairs at Restaurants Canada.
For most businesses though, the transition will require careful planning and coordination. For now, they see the GST holiday as an opportunity to boost sales while offering consumers some financial relief during a challenging economic period.
“It’s short notice and it’s not a lot of lead time… but the upside will be more sales in the long run,” Poirier said.
