On July 1, 2010 Ontario and British Columbia harmonized the Provincial Sales Tax (PST) and the Goods and Services Tax (GST) into one: the Harmonized Sales Tax (HST). In doing so, Ontario and British Columbia joined Nova Scotia, New Brunswick and Newfoundland and Labrador who harmonized their provincial taxes back in 1997.
Ontario's HST and your home and car insurance premiums
Ontario's PST (also referred to as the Retail Sales Tax - RST) is currently 8 per cent, and is applied to some types of insurance premiums. For example, your home insurance is subject to it as are some travel insurance products like trip cancellation coverage.
With the introduction of the HST in Ontario:
- You will not see any changes to your Ontario car insurance premiums. Pre-harmonization, Ontario car insurance premiums were not taxed GST or PST, and will not be taxed with the HST.
- You will not see any changes to your Ontario home insurance premiums. Pre-harmonization, Ontario home insurance premiums were taxed PST (at 8%) but not GST. Under the HST, Ontario home insurance premiums will continue to be taxed at a rate of 8 per cent. Note the federal portion of the HST (5%) will not be applied to your Ontario home insurance premiums.
As for other insurance premiums, like travel insurance, life insurance and health insurance, you should not see any changes. According to the Ministry of Revenue, "Ontario will continue its application of tax at a rate of 8 per cent on the same types of insurance premiums currently taxed under RST. Insurance that is currently exempt from RST, such as automobile insurance premiums, will continue to be exempt from RST after June 30, 2010."
British Columbia's HST and your insurance premiums
British Columbia's PST is currently 7 per cent. With the introduction of the HST in British Columbia:
- You will not see any changes to your British Columbia car insurance premiums. Pre-harmonization, BC car insurance premiums were not taxed GST or PST, and will not be taxed with the HST.
- You will not see any changes to your BC home insurance premiums. Pre-harmonization, British Columbia home insurance premiums were not taxed GST or PST, and will not be taxed with the HST.
These two examples are specifically itemized and detailed by the Province of British Columbia's government website. As for other insurance premiums, the rule of thumb is if you do not already pay GST on them, than there will be no HST.
What's it all mean?
Whether you live in Ontario or British Columbia, you shouldn't see an increase in the car insurance or home insurance premiums you pay as a result of the introduction of the HST.
While you won't pay more due to taxes, make sure you are not already paying more than you have to by comparing quotes from competing insurers. Insurance premiums constantly change, and the provider that offered you the best rate last year, may no longer offer you the best rate this year.