The Harmonized Sales Tax (HST) in Ontario is 13%.
The Harmonized Sales Tax (HST) is applied to most goods and services in Ontario, although there are certain categories that are exempt or eligible for rebates. These exceptions help reduce the overall tax burden on specific items.
What is the HST?
Ontario implemented the HST on July 1st, 2010. The HST combines two taxes: an 8% provincial sales tax and a 5% federal sales tax. These replaced the former 8% Retail Sales Tax (RST) and 5% Goods and Services Tax (GST).
Ontario HST Rebates and Exemptions
Most rebates and exemptions that apply to the federal portion of the HST (5%) also apply to the provincial portion (8%). Additionally, there are specific categories where only the provincial portion is not charged. These include items like print newspapers, books (including audiobooks), children’s clothing, footwear, car seats, booster seats, and diapers.
Ontario First Nations and the HST
Registered First Nations in Ontario receive a rebate on the 8% provincial portion of the HST for various purchases, including adult clothing, household goods, vehicles, and over-the-counter medications. This rebate applies even for purchases made off-reserve. For more details, you can refer to Ontario’s First Nation rebate information.
Retail Sales Tax (RST) Exceptions
While the HST covers most goods and services, some items are still subject to the Retail Sales Tax (RST) instead of the HST. These include used vehicle sales, boats, aircraft, and insurance. Unlike the HST, all RST revenue goes directly to the Ontario government.
Special Sales Tax for Used Vehicles
When you purchase a used vehicle in Ontario, a 13% RST is applied when you register the vehicle. This tax is separate from the HST, and the value is determined by either the purchase price or the vehicle’s wholesale value (Red Book), whichever is greater. This tax applies even if the vehicle was previously taxed with HST.
HST on New Vehicle Purchases
For new vehicles, the 13% HST is applied at the point-of-sale by the dealer or manufacturer. The same tax applies to new boats and aircraft purchased in Ontario.
Federal HST Rebates and Exemptions
Some goods and services are exempt from the federal portion of the HST or are zero-rated, meaning they are taxed at 0%. These include basic groceries like meat, dairy, eggs, and vegetables, as well as prescription drugs, medical devices, and feminine hygiene products. Additionally, services like resale of residential property, long-term rentals, education, medical and dental services, financial services, legal aid, and daycare are exempt from the federal portion of the HST.
Ontario’s Sales Tax Revenue
Sales taxes, including HST and RST, are a significant source of revenue for Ontario. In the 2023 fiscal year, Ontario expects to collect $35.35 billion from sales taxes, which accounts for 24.5% of the province’s total taxation revenue. To help with the cost of sales tax, the Ontario Sales Tax Credit offers up to $345 per person, paid annually or monthly.
Federal Sales Tax Revenue
On a national level, sales taxes also contribute to Canada’s fiscal budget. The 5% GST generated $54.4 billion in revenue in the 2023 fiscal year, making up 11.9% of the federal government’s total revenue.
