The Harmonized Sales Tax (HST) in Ontario is a combination of the federal Goods and Services Tax (GST) and the provincial sales tax (PST). The total HST rate in Ontario is 13%, with 5% representing the federal GST and 8% representing the provincial PST. This tax applies to most goods and services sold within the province. However, certain essential items, such as basic groceries, prescription medications, and medical devices, are either exempt or zero-rated. Ontario also provides rebates like the Ontario Sales Tax Credit to assist low-to-moderate-income residents in offsetting their tax burden.
| Description | Percentage |
| Federal GST | 5% |
| Provincial PST | 8% |
| Total HST | 13% |
| Exemptions | Basic groceries, prescription medications, medical devices |
| Rebates and Credits | Ontario Sales Tax Credit for low-to-moderate-income residents |
Exempt and Zero-Rated Goods and Services
- Exempt Goods and Services: These items are not subject to HST, such as basic groceries, residential rent, child care services, and most health and dental services. Clarify which goods and services fall into this category and explain the difference between exempt and zero-rated.
- Zero-Rated Goods and Services: These are taxable but at a 0% rate, meaning businesses can claim input tax credits, but the consumer pays no tax. Examples include prescription medications, medical devices, and exports.
HST Rebates and Credits
- Ontario Sales Tax Credit: This credit is designed to help low-to-moderate-income individuals and families offset the burden of HST. Provide details on eligibility, how much individuals can receive, and how to apply.
- Other Provincial and Federal Rebates: Include the New Housing Rebate for new home buyers and any other relevant rebates or credits that help reduce the overall HST burden.
How to Calculate HST
- Calculation Examples: Show readers how to calculate HST on goods and services. For example, if a product costs $100, the HST would be 13% of that, making the total $113.
- HST Calculator Tools: Mention online tools or apps that make it easy for consumers and businesses to calculate HST.
HST Registration for Businesses
- Who Needs to Register?: Businesses with gross revenues of $30,000 or more in a 12-month period must register for HST. Explain the conditions under which smaller businesses might also need to register voluntarily.
- How to Register for HST: Guide businesses through the process of registering with the Canada Revenue Agency (CRA) online or by phone.
- Filing and Remitting HST: Describe the filing process, including how often businesses need to file (e.g., annually, quarterly) and how they can remit the HST collected to the CRA.
Impact of HST on Consumers and Businesses
- How HST Affects Consumers: Explain how the 13% tax increases the final price consumers pay for most goods and services. Highlight how exemptions and rebates can help reduce the financial burden.
- Impact on Businesses: Discuss input tax credits (ITCs), which allow businesses to recover HST paid on expenses. Explain how businesses can lower their tax burden by claiming ITCs.
Differences Between Ontario and Other Provinces’ Sales Taxes
- Comparison to Other Provinces: Compare Ontario’s 13% HST rate to other provinces. For example, Nova Scotia has a higher HST rate at 15%, while provinces like British Columbia and Saskatchewan have separate GST and PST systems.
Special Situations
- HST on Housing and Real Estate: Explain how HST applies to new home purchases and major renovations. Mention the New Housing Rebate, which allows qualifying homebuyers to recover a portion of the HST paid.
- HST on Imported Goods: Outline the rules for paying HST on goods imported into Ontario, including when HST is collected by the Canada Border Services Agency (CBSA).
- HST and Tourism: Highlight how HST applies to tourism-related purchases like accommodations, meals, and souvenirs. Mention rebate programs available to foreign tourists in specific cases.
Compliance and Penalties
- Non-Compliance Penalties: Explain what happens if businesses fail to comply with HST obligations, including late registration, failure to remit taxes, or improper record-keeping. Penalties can include fines and interest.
- Audits and Investigations: Describe the CRA’s role in conducting audits to ensure businesses are complying with HST regulations, what to expect during an audit, and how to avoid issues.
