As Ontario insurance broker, we’ve had countless conversations with clients about their premiums, coverage options, and what’s included in the final cost. One question we hear time and time again is, “Does insurance HST in ontario?” It’s a fair question — one that many people ask when reviewing their insurance policy or considering new coverage.

Let me take you back to one of those discussions. A client, new to Ontario, came in to discuss auto insurance. They were moving from another province and were shocked when they saw the final bill. “Wait a minute,” they said, “is HST added to this? I didn’t see it anywhere in the breakdown.” This is a common moment of confusion, especially for those unfamiliar with Ontario’s tax system.

Now, let’s clear out this confession.

Does Insurance Have Hst In Ontario?

Yes, insurance in Ontario does include HST. When you purchase insurance, whether it’s auto, home, or another type, HST (Harmonized Sales Tax) is applied to the premium. In Ontario, the HST rate is 13%, which means it’s added on top of your base insurance cost.

For example, if your auto insurance premium is $1,000, the HST would be $130, bringing your total premium to $1,130. It’s a standard practice in Ontario, and most people are used to seeing that extra tax added to their insurance bills. So, when you’re budgeting for your insurance, make sure to factor in that 13% HST!

If you ever have doubts or want a clear breakdown of how your premium is calculated, don’t hesitate to reach out to your insurance provider. They should be able to explain exactly how the HST is applied to your policy.

Rules After the Implementation of HST in Ontario

The introduction of the Harmonized Sales Tax (HST) in Ontario in 2010 merged the province’s 8% Provincial Sales Tax (PST) with the 5% Goods and Services Tax (GST), creating a single 13% tax on most goods and services. The implementation of HST affected several industries, including insurance. Here’s a breakdown of the key rules after the implementation of HST:

1. Application of HST to Insurance Premiums

• Insurance premiums in Ontario are subject to HST. This includes auto insurance, home insurance, health insurance, and life insurance.
• HST is applied on the total premium amount, so if your premium is $1,000, the HST would be $130 (at the current 13% rate), making your total bill $1,130.

2. Exemptions from HST

While most types of insurance are subject to HST, there are some exemptions:

• Life Insurance: HST is not charged on life insurance premiums. This includes term life, whole life, and universal life insurance.
• Disability and Health Insurance: HST is generally not applied to premiums for most health insurance plans or disability insurance. However, if the health plan includes certain additional benefits (e.g., critical illness), HST might apply to those specific elements.

3. Commercial vs. Personal Insurance

• Personal Insurance: HST applies to personal insurance premiums, such as auto and home insurance.
• Commercial Insurance: The same rules apply to business or commercial insurance, but the input tax credits (ITCs) available to businesses may offset the HST they pay on their insurance premiums.

4. How HST Affects Claims Payments

• Claims and Settlements: Generally, HST is not applied to the amount you receive in a claim settlement. However, if you’re purchasing goods or services as part of the claim (like car repairs or medical treatments), HST would apply to those specific purchases.
• For instance, if your car is damaged and the repair costs are covered by your auto insurance, HST will be added to the cost of the repairs, but not to the claim payout itself.

5. GST/HST Exempt Services

• Some services related to insurance, such as advice or consulting on insurance policies, are exempt from HST if they are considered a financial service. However, this rule applies mainly to services provided by agents or brokers.

6. Filing and Reporting for Insurance Companies

• Insurance companies are required to collect HST from their customers and remit it to the Canada Revenue Agency (CRA).
• They must also keep records of HST collected, as it is considered part of their tax obligations under the Excise Tax Act.

Impact on Consumers:

For consumers, the implementation of HST means that many goods and services, including insurance premiums, now have a higher total cost due to the addition of the 13% tax. However, it’s important to note that the tax rate is consistent across most goods and services, so it applies equally to a broad range of products in Ontario. Always remember to account for the extra 13% when you’re budgeting for your insurance premiums.

How to Get HST in Ontario

In Ontario, if you are a business owner or an individual providing taxable goods or services, you may need to register for HST (Harmonized Sales Tax) and collect it from your customers. Below is a detailed breakdown of the process:

1. Determine if You Need to Register for HST

• Mandatory Registration: You must register for HST if your business’s annual taxable revenue exceeds $30,000. This applies to both small businesses and self-employed individuals offering goods or services in Ontario.
• Voluntary Registration: Even if your revenue is under $30,000, you can choose to register for HST voluntarily. This can be beneficial because once registered, you can claim input tax credits (ITCs) on the HST you pay for business-related expenses.
• Types of Businesses: Most businesses, including retail stores, professional services, contractors, and insurance providers, must register for HST. Some goods and services may be exempt (like basic groceries or health services), so it’s important to know if your offerings are taxable.

2. Registering for HST

• Online Registration: The easiest way to register for HST is through the Canada Revenue Agency (CRA) website. The process is straightforward:
  • Go to the CRA’s Business Registration Online page.
  • You will need to create a CRA Business Account and fill out the registration form.
  • Provide your business details, including business name, address, and type of goods or services offered.
• By Phone or Mail: You can also register for HST by contacting the CRA by phone or submitting the registration form via mail.
• After Registration: Once you are registered, you will receive a Business Number (BN) and your HST account will be set up. This number should be displayed on invoices you send to your customers.

3. Charging HST

• Collecting HST from Customers: After registration, your business is required to charge 13% HST on most taxable goods and services sold in Ontario. The amount collected will be added to your customer invoices.
  • For example, if you are selling a product for $100, you will charge $113 ($100 + $13 HST).
• Tax-Inclusive vs. Tax-Exclusive Pricing: You can either display the tax-exclusive price (showing the product price and then the tax separately) or a tax-inclusive price (where the tax is included in the total price).

4. Remitting HST to CRA

• Filing Periods: HST must be remitted to the CRA periodically, typically every quarter or annually, depending on your revenue and the filing frequency assigned to your business. The CRA will provide you with the specific dates for when your HST returns are due.
• Net HST Payable: When you file, you will calculate your net HST payable, which is the difference between the HST you collected from customers and the HST you paid on your business expenses. If you’ve paid more HST than you’ve collected, you can claim a refund.

5. Claiming Input Tax Credits (ITCs)

• What are ITCs?: Input Tax Credits (ITCs) allow you to recover the HST you paid on business-related purchases. This includes supplies, equipment, inventory, and even some services like professional fees.
• How to Claim ITCs: When you file your HST return, you can claim the ITC for the HST paid on eligible purchases. This will reduce the amount of HST you owe to the CRA.
• Record Keeping: Keep detailed records of all your purchases and the HST paid on them. You’ll need invoices to back up your claims.

6. Filing HST Returns

• Filing Online: You can file your HST return online using the CRA’s My Business Account portal or GST/HST NETFILE service. You will need your BN and your HST account details.
• Paper Filing: If you prefer, you can file your return by mailing it in, but online filing is faster and more efficient.
• Deadline: Filing deadlines depend on your assigned reporting period (e.g., quarterly, annually). Late filings may result in penalties, so make sure to file your return on time.

 

How Our Company Helps You with HST

We understand the complexities of managing HST for both individuals and businesses. Here’s how we can assist you:

• HST Registration Assistance: If you’re new to HST or unsure if you need to register, our team can guide you through the entire process, ensuring you’re compliant with CRA regulations.
• Clear Invoicing: We ensure that all invoices we provide clearly show the HST we’ve charged, so you always know what’s included in the total amount.
• Claiming Input Tax Credits: If you’re a business or self-employed individual, we help you understand how to claim input tax credits (ITCs) on your eligible expenses, ensuring you maximize your tax savings.
• Filing and Remitting HST: We can assist you in filing your HST returns on time, helping you manage your filing periods and keep track of the HST you owe or the credits you can claim.
• Expert Advice: Our knowledgeable team is available to answer any questions related to HST and how it impacts your insurance premiums or business operations.

Whether you’re managing your personal insurance needs or running a business, we’re here to make the HST process as simple and straightforward as possible. Let us take care of the details so you can focus on what matters most to you. Call us for more update.