Implementing GST break for two months proving to be a 'nightmare' for businesses

Canadian businesses are about two weeks away from having to scrap some of the tax they charge customers, but many have already realized that's no easy feat.

Since the federal government announced last Thursday that it will waive the GST on some toys, takeout meals and other goods sold between Dec. 14 and Feb. 15, businesses across the country have been trying to figure out how to implement the request that falls smack in the middle of their busiest season.

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Many have started the process by culling through lists of their products to decipher which items qualify for GST relief and make sense of idiosyncrasies embedded in the proposed legislation.

Printed books, for example, count but not colouring, sticker, stamp or coin books. Nor do reading materials like magazines when purchased individually rather through a subscription.

"It is a nightmare for independent businesses, including our winery members," said Michelle Wasylyshen, president and chief executive of Ontario Craft Wineries, in an email.

The Canadian Federation of Independent Business said 75 per cent of the 2,500 small firms it surveyed in recent days said this work will be "costly and complicated" and will amount to a median of $1,000 in additional costs for reprogramming systems.

The heart of that reprogramming will lie with point-of-sale systems, which help retailers process transactions and apply taxes to purchases.

"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," said Eric Lefebvre, the chief executive of MTY Group, a Quebec-based owner of dozens of restaurant brands including Bâton Rouge, Mucho Burrito and Jugo Juice.

"We're going from meetings to meeting trying to make sure we're going to meet that deadline and it's a little bit more complicated than it looks, so we basically have to put all our projects aside and pull all our people trying to achieve that and make sure we do it right."

Across the MTY portfolio, Lefebvre estimates 15 point of sale systems are being used — a product of his company's acquisitive nature.

Many of them are old systems implemented by former owners, leaving MTY "scrambling" now.

"There are some cash register systems that are a little bit more flexible where the programming might take two or three hours, but there are others also where it needs to be programmed at every store," Lefebvre said.

"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."

While the heavy lifting might centre on point-of-sale software, businesses will also have to reprint price lists and switch out tags or labels on items already on store shelves.

CFIB, which represents more than 97,000 small- and medium-sized businesses, said 65 per cent of the companies it surveyed think there's not enough time to complete all this work, especially given how busy they are these days.

Preparation for the tax relief period falls "right in the middle of the busiest retail week of the year with Black Friday, Small Business Saturday and Cyber Monday,” CFIB president Dan Kelly said in a statement.

He called on the federal government to compensate small businesses for the costs related to implementing the two-month long GST holiday and estimated at least $1,000 to cover programming and administrative costs would help.

He also urged the government to order the Canada Revenue Agency to forgive taxes owed, penalties and interests for any "good faith errors" made by small firms rushing to implement this change.

Katherine Cuplinskas, a spokesperson for Finance Minister Chrystia Freeland, said the GST tax break is meant to help acknowledge that not all Canadians are feeling the progress made on lowering inflation.

"We can’t set prices at the checkout, but we can give Canadians a break on essentials and holiday gifts – to help them afford the things they need and save for the things they want. And that is exactly what we’re doing," she said in a statement.

Wasylyshen acknowledged the tax relief "does present a number of logistical ordeals for wineries, "but 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," she said. 

This report by The Canadian Press was first published Nov. 28, 2024.