Insurance Premium Tax in Ontario: Rates, RST, and Filing

Ontario’s insurance premium tax is a provincial charge on the gross premiums collected or paid on insurance covering risks located in the province. Rates run from 2% on life, accident, and sickness premiums to 3.5% on property insurance, with a 3% catch-all for everything else. A separate 8% Retail Sales Tax applies to many of the same products, so the two charges can stack on a single premium.¹

Rates by Type of Insurance

The rate depends on the line of coverage, not the size of the insurer or the policyholder. It applies to gross premiums written, with no deduction for commissions or administration.

Life insurance: 2%
Accident insurance: 2%
Sickness insurance: 2%
Property insurance: 3.5%
All other insurance: 3%

Property insurance sits at 3.5%, not the 3% figure that older summaries sometimes carry. Reciprocal or inter-insurance exchanges use this same table.¹

Who Has to Pay

Licensed insurers with a permanent establishment in Ontario are the obvious payers, but the tax reaches further. Benefit plan administrators owe it on funded or unfunded employee benefit plans, even where no traditional insurance contract exists. Brokers who arrange coverage with an insurer not licensed under the Insurance Act carry the tax obligation themselves. An Ontario corporation that enters into or pays premiums under a contract with an unlicensed insurer owes the tax directly, and an Ontario individual placing coverage through an Ontario broker with an unlicensed insurer is caught the same way, though not for life insurance. Reciprocal exchanges, where subscribers exchange contracts of indemnity through a common attorney, are treated like licensed insurers.¹

Where the contract is signed does not matter. What matters is that the insured risk is located in Ontario or the insured person lives here.

The 8% Retail Sales Tax That Stacks on Top

Ontario also charges an 8% Retail Sales Tax on premiums under many insurance contracts. This is not the HST. It is a standalone provincial sales tax specific to insurance, and it runs in parallel with the premium tax. A property policy, for example, can attract both the 3.5% premium tax and the 8% RST on the same dollar of premium.

RST applies to premiums covering property in Ontario, including builder’s risk, snowmobiles, and all-terrain vehicles insured under a property policy. It also applies to group life insurance taken out in connection with a mortgage and to trip cancellation insurance where the insured could cancel before leaving Ontario.²

For employer group insurance, location decides. Employer-paid premiums are taxable if the employee works in Ontario or is paid from Ontario. Employee-paid premiums are taxable if the employee both lives and works in Ontario. Performance bonds, payment bonds, and fees already subject to HST are not caught by the 8% RST.²

Benefit Plans and the April 2026 Election

Drug, dental, vision, disability, and supplemental health arrangements often run through benefit plans rather than insurance contracts. Ontario still taxes them. A benefit plan (sometimes called an Uninsured Benefit Arrangement) provides protection against risks that could otherwise be insured, and the premium tax applies whether the plan is partly insured or not insured at all.¹

Timing turns on funding. For a funded plan, the tax is charged on taxable contributions paid in by the planholder and members; a plan counts as funded if contributions exceed what is needed for benefits foreseeable and payable within 30 days. For an unfunded plan, the tax is charged on taxable benefits paid out. Administration fees tied to either type of plan are also taxable.

Starting April 1, 2026, planholders of funded plans can elect to be treated as unfunded for premium tax purposes. After the election, tax stops being collected on contributions going in and instead becomes payable on benefits going out. A limited retroactive election is available, but no election can apply earlier than April 1, 2026. Contributions already taxed before the election date, called tax-paid contributions, can continue to fund benefits without further tax; once that balance runs out, tax resumes on payouts drawn from new contributions.¹

Some benefit payments are exempt. These include benefits for a plan member who is an Indian within the meaning of the federal Indian Act and ordinarily resident on a reserve in Canada, benefits for a plan member who does not live in Ontario, and benefits that must be included as employment income under the federal Income Tax Act, such as certain wage-loss replacement payments. Plans established under a federal or Ontario statute, and contracts under the Prepaid Hospital and Medical Services Act between a registered association and its subscribers, sit outside the benefit plan rules entirely.¹

Filing and Paying

Returns and payments run through ONT-TAXS, the Ministry of Finance’s online portal. The system handles filing, electronic payment, and secure correspondence with the ministry.³ Insurers with a permanent establishment in Ontario file the CT8 return; separate premium tax returns and guides can be obtained by contacting the Ministry of Finance.⁴

Reciprocal insurance exchanges are not required to make instalment payments. They still owe the full balance by the due date, but they skip the periodic instalment cycle that applies to licensed insurance companies.¹

Interest on Late Payments

Interest on overdue tax is set quarterly by the Ministry of Finance. For the period from April 1 to June 30, 2026, the rate on amounts owed to the ministry is 7%. Overpayments earn 1%, and amounts refunded after a successful objection or appeal earn 4%.⁵ These are fixed quarterly rates, not floating spreads, and the ministry publishes updated figures before each quarter. Check the current rate before making a late payment.

If You Disagree With an Assessment

A Notice of Objection is the first step in challenging a Notice of Assessment or Reassessment. The deadline is 180 days from the day the assessment was mailed or personally delivered. An extension is possible, but you have to apply before the 180 days expire, and no extension can push the filing date past one year from the mailing date on the original notice.⁶

Applying after the 180-day window has already closed requires showing that filing on time was impossible and that you moved as soon as circumstances allowed. That bar is high, so treat the 180 days as firm. A successful objection earns interest on the refunded amount at the quarterly appeal rate, currently 4%.⁵

1
Ontario.ca. Corporations Tax: Insurance Premium Tax
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Ontario.ca. Insurance and Benefits Plans – Retail Sales Tax
3
Government of Ontario. ONT-TAXS online
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Government of Ontario. Corporations Tax – Forms and Publications
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Open Government Portal. Tax interest rates
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Ontario.ca. Objections and Appeals – Frequently Asked Questions, Forms and Publications