Canada’s GST Holiday: What’s Covered and How to Save

Many Canadians are eagerly awaiting the federal government’s upcoming GST holiday, but experts warn that shoppers should focus on genuine needs and avoid being lured into impulse purchases that could harm their finances.

“Any discount helps, especially for low- and middle-income families,” said Jessica Morgan, founder of the financial literacy site Canadian Budget. Still, she emphasized that the value of the tax break depends on what you buy and when you buy it.

The GST holiday can deliver immediate savings, but those short-term gains need to be weighed against how purchases fit into your overall budget. Putting large purchases on credit cards can lead to interest charges and higher long-term costs that offset the tax savings.

“Deciding whether to buy during the holiday comes down to timing and necessity—whether you need an item now, are buying gifts, hosting gatherings, or simply restocking groceries,” Morgan said.

What items are included in the GST holiday?

The federal GST holiday will temporarily remove the 5% federal sales tax on a range of everyday items, including children’s clothing, books, toys, many food items and some alcohol, from Dec. 14 until mid-February. The federal package also includes a one-time $250 benefit payment to Canadians who earned up to $150,000 last year.

Following the federal announcement, the Ontario government proposed a similar provincial tax break for eligible items. If Ontario’s plan is enacted, residents there could see combined savings that approach a total tax reduction of roughly 15% on qualifying purchases.

Morgan says families with young children stand to gain the most and suggests stocking up on essentials like diapers during the tax holiday. For example, a box of diapers that normally costs $35–$40 could be about $2 cheaper with the federal tax break—modest per item, but meaningful over several weeks.

“It’s not a massive windfall, but small savings add up across multiple purchases between Dec. 14 and mid-February,” Morgan noted.

Consider combining the tax break with Boxing Day discounts

For big-ticket items that qualify for the tax holiday, Morgan recommends holding out for Boxing Day sales so you can stack retailer discounts with the temporary tax relief.

Shoppers should compare current sale prices with the expected tax holiday savings. For instance, a retailer offering 30% off a large purchase—like a gaming console or a sizable artificial Christmas tree—will likely result in a larger reduction than a 5% tax cut alone, depending on timing and stock availability.

Bruce Sellery, CEO of Credit Canada, cautions that the tax holiday could unintentionally pressure consumers—especially those with existing debt—to buy more simply to take advantage of the discount.

“Searching for the best deal isn’t always the answer,” Sellery said. “The best way to save is to avoid the purchase entirely—That saves 100%.” He added that the average tax savings are modest—“it’s barely going towards lunch,” he quipped.

To illustrate, a family spending $500 on children’s clothing would save about $25 with a 5% discount—helpful but not transformative when compared with the total cost. Sellery also pointed out that many households rely on credit for major purchases; even with the tax break, borrowing to pay for items can increase overall costs through interest, effectively “renting” the money.

“The larger concern is that many people simply don’t have extra cash to spend, discounted or not,” he said. That reality means shoppers should prioritize needs and cash flow over the lure of a temporary sale.

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