With 2-month tax holiday set to begin, P.E.I. businesses and customers urged to be patient

While shoppers and diners in P.E.I. will get some relief at the checkout starting this weekend, small businesses on the Island may bear the brunt of a two-month tax holiday. 

Beginning Saturday, the federal goods and services tax (GST) will be removed for two months from a range of items, including children's toys, books, restaurant meals and takeout, as well as beer and wine.

In provinces like Prince Edward Island where the GST is blended with the provincial sales taxes to form the HST, or harmonized sales tax, the provincial portion will also disappear from receipts.

Here, that represents a 15 per cent tax that won't be charged for the two months covered. 

For some small businesses on the Island, that can mean a lot of work to adjust their point-of-sale systems — and to suss out which items should be tax-exempt. 

"We're going through our catalog of about 100,000 different products and picking out different products that may be inside of the GST holiday," said Chris Wilkinson, website manager for Great Hobbies in Stratford. 

"When you walk into our store, it looks like everything is a toy. We do have toys that start at [ages] three-plus and… we have hobby-grade cars and trucks that do 100 miles an hour, which are definitely not toys."

The Canada Revenue Agency's list of items and products eligible for the tax exemption is quite long, and there are also some rules that have the potential to trip up both customers and businesses. 

Pre-made drinks at a bar will be tax-free, for example, but if a bartender makes your drink, it could be subject to HST.

For shops like Great Hobbies, children's toys and games will be exempt only if they're marketed to those under 14 years old. 

Any savings this time of year, especially in this economy… most definitely we're going to take part in that.— Chris Wilkinson, Great Hobbies

With so much to consider on short notice, the accounting firm MRSB held a webinar Thursday morning to help Island business owners understand the tax break and what they need to do. 

Chris Arsenault, a Charlottetown-based tax partner with the firm, said customers, owners and their staff should be patient with one another in the early days.

"There [are] going to be kinks in systems… that everybody's got to figure out," Arsenault said. "Double-check your receipt, because I'm sure the restaurant… would love to know if there's a mistake, so that way they can go and fix their systems." 

Otherwise, Arsenault advised everyone to embrace the tax holiday and hope it has the intended effect of easing Islanders' financial strain while also boosting sales. 

Back at Great Hobbies, Wilkinson said the changes are putting some pressure on the small business, but he thinks the break will benefit everyone. 

"It's pulling a lot of resources out of some things [staff] should be working on into a two-month window, but I think any savings this time of year, especially in this economy… most definitely we're going to take part in that," he said. 

"People are interested in saving money, 100 per cent."