The Trudeau government has unveiled a sweeping affordability package that includes a temporary suspension of the goods and services tax (GST) and a one-time cash rebate to ease household costs through the holiday season.
Prime Minister Justin Trudeau said Thursday that the federal government will introduce legislation to remove the GST and federal portion of the HST from a wide range of everyday purchases between December 14, 2024, and February 15, 2025.
“Our government can’t set prices, but we can give Canadians, and especially working Canadians, more money back in their pocket. With a tax break for all Canadians and the Working Canadians Rebate, we’re making sure you can buy the things you need and save for the things you want,” Justin Trudeau, Prime Minister of Canada.
The list of tax-free items includes prepared foods, restaurant meals, snacks, children’s clothing and footwear, diapers, car seats, toys, books, newspapers, and even Christmas trees. Imports of the same products will also be exempt if brought into Canada during the two-month window.
“For families worried about stretching every dollar this holiday season, this will mean real relief at the checkout,” Trudeau told reporters in Ottawa.
According to Financial estimates, the measure will deliver $1.6 billion in savings. Officials say a family spending $2,000 on eligible goods during the holiday could save roughly $100 in GST, with larger savings in provinces that collect HST.
The package also includes a tax-free $250 payment for anyone who worked in 2023 and reported income of $150,000 or less. Finance officials said the rebate will reach about 18.7 million Canadians beginning in early spring 2025.
Together, the rebate and the GST holiday represent a $6.3 billion affordability plan, with $4.7 billion going toward rebates and $1.6 billion in tax relief. Both measures require parliamentary approval.
““The holiday season is when expenses are highest for many Canadians and their families – even with inflation back down to 2 per cent and interest rates being cut four times this year. With new tax relief on groceries and seasonal expenses and a rebate for working Canadians, we are reducing costs when they are highest for Canadians. This is about helping you celebrate with family and friends and start 2025 with a little extra money in your bank account,” Finance Minister Chrystia Freeland said.
Retailers and small businesses expressed concern about the timing. With less than a month before implementation, companies will have to adjust point-of-sale systems and clarify which goods qualify.
“This is a very short window to reprogram tills and train staff,” said Dan Kelly, president of the Canadian Federation of Independent Business. “For small merchants in the busiest season of the year, this could be chaotic.”
Economists were divided on the policy’s effectiveness. Some argued the measures would put cash back into households quickly, while others suggested the holiday might simply shift spending into the two-month window rather than provide lasting relief.
Conservative leader Pierre Poilievre criticized the announcement as “a short-term stunt that doesn’t address the cost-of-living crisis,” while NDP leader Jagmeet Singh said the government was finally “acknowledging the squeeze families are facing.”
Markets reacted immediately. The Canadian dollar ticked higher and bond yields climbed after traders adjusted expectations for federal spending. Analysts said the package could complicate the Bank of Canada’s path on interest rates.
The government is urging Parliament to pass the legislation quickly so consumers see the savings in time for December purchases. Until then, both businesses and shoppers are left preparing for a potential holiday season unlike any other.
“This is urgent,” Trudeau said. “Canadians deserve to feel a little relief this Christmas and into the new year.”
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