Is there HST on insurance in Ontario?

Insurance premiums are exempt, not taxable

The Excise Tax Act treats most insurance activity as an exempt financial service. This means insurers do not charge GST/HST on the premiums policyholders pay. This is the same broad category that exempts many banking and lending services. It applies regardless of the type of policy, whether it covers a home, a business, a life, or a vehicle.

Because premiums are exempt rather than zero-rated, insurers generally cannot claim full input tax credits on the GST/HST they pay for their own operating costs. This is the same restriction that applies to other financial service providers. This is a structural feature of how exempt supplies work under the Excise Tax Act, not something specific to the insurance industry alone. See our explainer on the difference between zero-rated and exempt supplies for how this restriction compares to a zero-rated sale. There, the seller keeps its full input tax credits, even though the customer pays no tax either way.

Ontario's own 8% retail sales tax runs alongside GST/HST

Ontario kept a few items under its older provincial tax framework when it adopted HST in 2010. Rather than folding those items into HST, it left them under the older rules, and insurance premiums are one of them. As a result, Ontario applies an 8% retail sales tax to most insurance premiums, a tax that is entirely separate from GST/HST and governed by different provincial rules.

Automobile insurance premiums are specifically excluded from this 8% provincial tax. So a driver's auto policy is not subject to it, the way a homeowner's or business property policy generally is. This distinction between auto and other policy types is worth confirming for a specific product. The provincial rules apply by policy category, rather than by a single blanket rate across all insurance.

This 8% provincial tax is collected and remitted differently from GST/HST. It generally flows through the insurer, rather than appearing as a line item the policyholder pays separately at the point of sale. It also follows Ontario's own retail sales tax rules, rather than the CRA's GST/HST administration. A business trying to reconcile its insurance costs should not expect to see this tax handled through its usual GST/HST return at all. It sits entirely outside that system. A business owner reviewing an annual insurance renewal should read the invoice carefully, to understand which portion, if any, reflects this provincial tax. They should not assume the total is simply the base premium.

Broker commissions are exempt too

An insurance broker's commission for arranging a policy is treated as part of the same exempt financial service category as the premium itself. This is because arranging for a supply of insurance is specifically included in the definition of an exempt financial service under the Excise Tax Act. This means a broker does not charge GST/HST on the commission income earned from placing a client's policy.

This is consistent with how commissions work elsewhere in the financial services space. A mortgage broker's commission and an insurance broker's commission are treated similarly. Both fall under the exempt financial services umbrella, rather than being taxed as an ordinary consulting or advisory fee would be.

A newly established brokerage does not need to register for GST/HST purely because of its exempt commission income. The small supplier test only counts taxable supplies toward the $30,000 threshold. See our answer on when you have to register for GST/HST for how that test is applied more generally. Many brokerages still register anyway once they add any taxable revenue stream, such as paid advisory work billed separately from commission income.

Confirm the exact treatment for a specific policy type against current Ontario retail sales tax rules, since exclusions apply by category and are worth verifying case by case.

What exempt commission income means for a broker's own credits

A broker's commission is an exempt supply, not a taxable or zero-rated one. Because of that, the broker generally cannot claim input tax credits for the GST/HST paid on business inputs that relate to earning that exempt commission income. Office rent, software, and general overhead are among those inputs. This is a meaningful difference from a typical consulting or professional services business, where most inputs generate a recoverable credit.

A brokerage that also earns some taxable revenue needs to allocate its input tax credits between the exempt and taxable portions of the business. This taxable revenue might come from fee-for-service advisory work billed separately from commissions, for example. It should not assume everything is treated the same way. Getting this allocation wrong in either direction understates or overstates what the brokerage is entitled to claim. Our answer on how input tax credits work covers the general allocation approach a mixed exempt-and-taxable business needs to apply.

How we help insurance brokers with this

We help brokerages separate exempt commission income from any taxable fee-for-service revenue. We also allocate input tax credits correctly across the two, rather than treating a mixed brokerage as either fully exempt or fully taxable by default. We also help track Ontario's separate 8% retail sales tax obligations alongside GST/HST reporting. The two run on different schedules and rules, despite both touching the same premium dollar. Our tax services for insurance brokers page covers commission structures and mixed-revenue reporting in more detail. Our bookkeeping for insurance brokers page covers the recordkeeping side of tracking commission income day to day.