Ontario is one of the provinces in Canada that charges a Harmonized Sales Tax (HST) of 13%. The HST is applied to most goods and services, although there are some categories that are exempt or rebated from the HST.
The HST was adopted in Ontario on July 1st, 2010. The HST is made up of two components: an 8% provincial sales tax and a 5% federal sales tax. These replaced the 8% Retail Sales Tax (RST) and 5% federal Goods and Services Tax (GST) respectively.
|Total After Taxes||$||56.50|
Most exemptions and rebates to the federal 5% portion of the HST also apply to the provincial 8% portion. There are also categories of goods and services that are not charged the provincial portion of HST. These rebates and exemptions are separate from the ones granted on a national level.
These categories include:
Registered First Nations are also granted rebates on the 8% provincial portion of the HST on many categories of items, including adult clothing, many household goods, vehicles, OTC medications and more. This rebate applies even if purchases are made off-reserve. See Resource for more details.
While the HST now applies to most goods and services, some exceptions are charged a Retail Sales Tax (RST) instead of HST. These exceptions include used vehicle sales, boats and aircraft, as well as insurance. While revenues from the HST are shared between the province of Ontario and the federal government, all revenues from the RST go directly and only to the Ontario government.
If you buy a used vehicle, you will have to pay a 13% Retail Sales Tax (RST) when you register the vehicle at a service Ontario Center in Ontario. This tax is different and separate from the HST. All revenues from the RST will go directly to the province of Ontario.
The value of the vehicle will be based on the greater of your purchase price or the vehicle’s wholesale value (Red Book). This tax will apply to all used vehicle sales in Ontario as well as of cars that are imported into Ontario from other provinces or outside Canada. Even if the previous owner paid HST when they bought the vehicle, you will have to pay HST again on the purchase from the previous owner. This tax also applies to later sales and owners of the vehicle, if you choose to sell it.
Let’s say you buy a used 2020 Honda Civic DX for $12,000 CAD in Ontario. The vehicle’s wholesale value (Red Book) is approximately $15,000 CAD. The vehicle’s wholesale value is greater than your purchase price, so that value will be used for calculating your sales tax.
$15,000 * 13% = $1,950
You will have to pay a $1,950 CAD RST when you register the vehicle at a ServiceOntario center. You do not pay the tax to the person or entity that sold you the vehicle.
If you buy a new vehicle, the 13% HST (not RST) will be applied at the point-of-sale by your car dealer or manufacturer. A similar tax also applies to the purchase of boats and aircraft.
Goods and services that are zero-rated from the federal portion of the HST include:
Goods and services that are directly exempt from the federal portion of the HST include:
Sales taxes make up a significant portion of Ontario’s budget. Revenues from sales taxes such as the HST and RST are expected to total $28.1 billion, or 26.5% of all of Ontario’s taxation revenue, during the 2019 fiscal year. This is greater than revenue from Ontario’s Corporation Tax, Health Premium, and Education Property Tax combined.
Sales taxes also contribute to the Canadian government’s budget. The 5% Goods and Services Tax is expected to bring $40.8 billion in tax revenue during the 2019 fiscal year. This amounts to 14.2% of total tax revenue on the federal level. This is almost double the amount Canada spends on national defence every year.