The GST tax holiday is coming but will the savings actually make a difference?

While many Canadians highly anticipate the federal government’s upcoming GST holiday, experts say consumers need to make sure they’re saving money on what they need most without falling for the allure of a deal and hurting their bottom line.

For most low- and middle-income families, “getting any amount of discount is always a benefit,” said Jessica Morgan, founder of financial literacy site Canadian Budget.

But to take advantage of the tax break, “it really depends on what the purchase is for and when,” she said.

The tax break can mean savings in the short term, but the equation may change when you consider whether you can fit these purchases into your budget. Putting them on credit could mean racking up interest and adding to your debt.

“It’s a decision people will have to make depending on when they need to make those purchases, when they’re giving those gifts or if they’re hosting a dinner or they need to do their regular groceries,” Morgan said.

The federal government’s GST holiday will provide a five per cent discount on numerous items including children’s clothing, books, toys, food and some alcohol starting Dec. 14 until mid-February. The Liberals also pledged to send $250 benefit cheques to Canadians who earned an income of up to $150,000 last year.

On the heels of that announcement, the Ontario government announced a similar tax break for its residents on certain items.

If the provincial tax break is implemented, those living in Ontario could see a total tax break as high as 15 per cent on purchases.

Morgan said families with young kids will benefit the most from the tax break and they should consider stocking up on essentials such as diapers.

For example, a shopper would be saving about $2 on a box of diapers with the federal GST break, which can otherwise cost around $35-$40.

“Is it a huge chunk of money that you’re going to get back? No. But every little bit does help,” she said.

“When you’re seeing, ‘I might get $2 off my diapers or $3 off my groceries,’ it doesn’t seem like a lot,” she said. “But over the period of Dec. 14 to Feb. 15, it can add up.”

For big-ticket items that qualify for the tax cut, Morgan suggested waiting for Boxing Day sales to combine both store and tax discounts.

Some shoppers might be waiting for the tax holiday to make big purchases, but they should weigh it against other potential savings right now.

If a sale at a retailer offers 30 per cent off on a big-ticket item such as a gaming console or a large artificial Christmas tree — items on the federal government’s GST-exempt list — the discount is greater than the upcoming GST tax break.

Bruce Sellery, CEO of Credit Canada, says his main concern with the tax holiday is it could pressure consumers, particularly those with a lot of debt, to buy more just to get the tax break.

“The best way to save money is not to search for the best deal,” Sellery said. “The best way to save money is to not buy the thing.

“That is a savings of 100 per cent.”

He added the tax (discount) is not a lot of money in savings. “It’s barely going for lunch.”

For example, if a family is spending $500 on children’s clothing, a five per cent discount will save them $25 — not a lot of money when stacked against the total price tag.

Sellery said many low- and middle-income Canadians can’t afford to pay for high-ticket items in cash so they’d have to purchase on credit, adding to their debt load. Even with the GST discount, it’s still “basically renting that money,” he said.

“The big picture is a lot of people simply don’t have the money to be spending on this stuff, whether it’s discounted or not,” he said.