B.C. Wineries and Breweries Face Financial Strain Amid GST Holiday Hurdle

A two-month federal tax holiday on alcoholic beverages may seem like a gift to consumers this holiday season, but for many small wineries and breweries in B.C., it’s creating a financial strain.

Producers say they are being forced to cover the five per cent Goods and Services Tax (GST) out of pocket, even though it is no longer being charged to customers. The B.C. Liquor Distribution Branch (LDB) has stated that due to the complexity of making short-term changes to its systems, it will continue calculating GST on manufacturers’ sales and requiring them to remit the tax.

Small Businesses Hit Hard

For small alcohol producers like Teresa Townsley, owner of Festina Lente Estate Winery in Langley, B.C., this decision has led to a financial burden during what is already a slow season for sales.

“They’re paying that GST on the product but can’t levy it back to customers to recoup the cost,” Townsley said.

Townsley noted the LDB’s notification of its decision came late on Dec. 13, just one day before the tax holiday went into effect, leaving little time to adjust systems or seek clarification.

“It was a nasty little trick to bring this forward when we were already scrambling to implement the tax changes,” she added.

Tight Margins, Big Concerns

At Faculty Brewing Company in Vancouver, owner Mauricio Lozano estimated the GST shortfall would cost him thousands of dollars—roughly 20 per cent of his payroll—at a time when cash flow is tight.

“We’re coming into the low season for liquor manufacturing, and that is definitely a cash concern,” Lozano said. He expressed frustration with the LDB’s reasoning that its systems were too complex to adjust for the tax holiday.

“The attitude was concerning. As a small manufacturer, you want to comply, but this approach makes it incredibly difficult.”

LDB and Industry Reactions

In a statement, the LDB acknowledged the financial impacts on small manufacturers and promised to work with affected businesses to address cash flow challenges.

“Due to risks created when trying to change LDB's systems for the two months of this program, the LDB will work with industry associations and B.C. manufacturers that direct deliver to mitigate financial impacts,” the branch said.

However, producers remain skeptical about the branch’s commitment to resolving these issues and are calling for greater flexibility from the province and the Canada Revenue Agency during audits and tax filings.

Looking Ahead

For small businesses operating on tight margins, the GST holiday is proving to be more of a burden than a benefit. Lozano and others are urging the government to offer leniency as producers navigate this confusing rollout.

Townsley added that clearer communication and better planning could have avoided the current situation. “We’re just asking for fairness and the ability to adapt without putting our businesses at risk,” she said.

As B.C.’s small alcohol producers work to comply with the LDB’s requirements, many are left hoping the holiday season will bring not just customers, but solutions.