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Is Car Insurance Subject to HST in Ontario?

No HST is charged on car insurance in Ontario.

Those living in Ontario have become so used to almost everything being taxed that they are surprised to learn that when it comes to car insurance there is no tax. Which is a good thing because vehicle insurance is high enough in this province.

Most people when they get their insurance renewal notice only look at the bottom line of what is owed. They don’t realize that there has not been any HST tacked onto this.

RST (Ontario Retail Sales Tax)

tax calculation

Prior to the HST Ontario had an RST tax, which was applied to many goods and services at 8%. However, premiums on auto insurance were never included in this. Many other types of insurance premiums were subjected to this tax. When it comes to the Federal Goods and Services Tax (GST) there is also no taxes levied on the premiums for car insurance.

The reason the premiums are exempt from these taxes is that the premiums are considered to be financial services and as such are not taxable in any category of taxes for Ontario.

History of HST

This was a new tax that replaced the PST in 2010. However, it carried over the same tax exception for auto insurance premiums.

This is a tax that was created in 2010 and was to replace

What Tax is Charged On Car Insurance In Ontario?

At present, there are no taxes that are applied to car insurance in Ontario.

HST On Accident Claims

insurance claim

It should not be assumed that there is never any tax involved when it comes to auto insurance. There have been some issues brought before the Courts in Ontario regarding HST and accident claims. Some insurance companies were charging HST on the accident benefit claims that they were paying out. Several recipients of this claim proceeded with a court action challenging the charge of the HST to the insured instead of the insurer. In a recent court case, this court filing was thrown out on the technicality that the courts were not bound to hear this argument as it came under the umbrella of the LAT jurisdiction.

Taking Advantage Of This Tax Break

Individuals seeking out vehicle insurance coverage should take advantage of this tax break when it comes to insurance premiums and also be aware of it.

All too often it is taken for granted that HST has to be paid on everything. So when an insurance shopper gets a quote of their premiums they may be thinking that the total costs of the premiums quoted include the HST. This is not the case and when realizing this it means looking at the quote a little differently. When you get the quote this amount covers the actual amount you are paying for the premiums and nothing else. Knowing this will allow you to do some proper comparison shopping for vehicle insurance.

Is There HST On Business Car Insurance In Ontario?

There is no HST on vehicle insurance in Canada

Vehicle Insurance Tips

tips

There is no denying that many people lack knowledge when it comes to vehicle insurance. Some of the common mistakes they make are:

  • As stated they don’t realize they are not paying HST so they assume this is part of their premiums.
  • Many people do not read their vehicle insurance policies. This is not wise as there may be things in the policy that you do not agree with. Or you may assume that you are covered for something that you are not.
  • Another big mistake is not being honest on the insurance application. Some individuals do not give their proper address. It is because they think they will get a cheaper rate if the address shows a less risky area. If the insurance company finds out about this then they can void a claim.
  • Insurance Companies won’t find out about misleading information on an application. What many fail to realize is that when an insurance company has to pay out a claim they are going to thoroughly investigate it. This will include comparing the circumstances of the claim against information provided on the insurance application. Insurance companies have all types of resources available to them. Most of which contain a lot of information that can pertain to a claim.
  • Not all insurance companies are the same. When an individual gets a vehicle insurance quote they just assume that all the other companies will basically offer them the same premiums. This may not be the case. It is because each insurance company puts different priorities on the metrics they use. They all use similar metrics but it is how they view this that makes the difference in premiums.
  • Don’t be afraid to ask questions. Insurance companies are not perfect. They do make mistakes. If you don’t feel that something is right about your insurance coverage then ask questions. For example, if your insurance rates went up on your renewal ask why. Especially if there have not been any significant changes on your part.
  • Do some research. Become knowledgeable about what can raise your insurance premiums and what can lower them. For example, a specific make and model of the car may be more expensive to insure. Or just by driving with snow tires may give you a discount. You will be surprised at how much money you can save by being more knowledgeable about vehicle insurance.
  • Keep your insurance company informed. It is your responsibility as the insured to keep your insurance company informed as to any changes that may take place that could affect the cost or coverage of your vehicle insurance. Remember that your coverage is based on the information that you supplied them within your application. Anything beyond that may not be covered. For example, if you stated you did not use your vehicle for commuting then this changed. If you happened to be in an accident then your claim may be void.

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