Insurance premium tax rates by province in Canada run from 2% to 5% on the gross premiums insurers collect, with the exact figure depending on the province and the type of coverage. Insurers pay the tax, but the cost is built into your premium. Several provinces then add a separate retail or provincial sales tax directly on the premium you pay, which pushes the total tax load higher on certain policies.
How the Tax Works
The insurer is legally on the hook, not you. In pricing terms, though, the tax is baked into what you’re quoted. It’s calculated on gross premiums receivable, meaning the full premium before any deduction for broker commissions or policyholder dividends.
Which province collects depends on where the insured risk sits, not where the insurance company is headquartered. For personal coverage that’s your province of residence; for commercial coverage it’s where the property is located or where the covered employees work.1Government of British Columbia. Insurance Taxes A single policy covering risks in more than one province is split, and each province taxes its share.
Every province separates life, accident, and sickness coverage (lower rates) from property, casualty, and general insurance (higher rates). Some go further and single out property or motor vehicle insurance for their own rate. Classification matters because the gap between tiers can be meaningful.
One thing GST and HST do not do is apply to insurance. Insurance is an exempt financial service under the Excise Tax Act, so any tax line you see on an insurance invoice is provincial, not federal.
Premium Tax Rates by Province
Ontario
Life, accident, and sickness premiums are each taxed at 2%. Property insurance is 3.5%. All other insurance is 3%.2Government of Ontario. Corporations Tax: Insurance Premium Tax The tax is calculated on gross premiums without deduction for commissions or policyholder dividends.3Ontario.ca. Ontario Code Corporations Tax Act
Alberta
Life, accident, and sickness insurance is taxed at 3%. All other contracts are at 4%. These rates took effect April 1, 2016, under Part 9 of the Alberta Corporate Tax Act.4Government of Alberta. Insurance Premiums Tax Older references citing 2% and 3% predate that change.
British Columbia
Life and health insurance, including accident, sickness, and loss-of-wage coverage, is taxed at 2%. Property and automobile insurance is at 4.4%. Aircraft, liability, credit, surety, and legal expense insurance fall into a third tier at 4%.5Government of British Columbia. Licensed Insurance Taxes
Manitoba
Life, accident, and sickness premiums are at 2%. Property insurance is at 4%. Most other insurance is at 3%, and a specific carve-out keeps aircraft insurance, automobile insurance, hail insurance, and fire damage to automobiles at that 3% rate rather than the higher property rate.6Province of Manitoba. Insurance Corporations Tax
Saskatchewan
Life, accident, sickness, and hail insurance premiums are taxed at 3%. Property and all other insurance is at 4%. Individual life, accident, and sickness policies in force before April 1, 2000, are grandfathered at 2% until they lapse. On top of the base rate, Saskatchewan adds a separate 1% motor vehicle insurance premiums tax and a 1% fire safety tax on fire insurance premiums. Marine insurance and reinsurance are exempt.7Government of Saskatchewan. Insurance Premiums Tax
Quebec
Quebec charges a single 9% tax on insurance premiums under An Act Respecting the Québec Sales Tax.8Revenu Québec. Tax on Insurance Premiums Despite where it lives in the statute book, this is not the regular QST. GST and QST do not apply to insurance premiums at all; the 9% is a standalone levy.9Revenu Québec. Tax on Insurance Premiums — Payment That rate makes Quebec the highest by a wide margin.
New Brunswick
Life, accident, and sickness insurance is taxed at 2%. All other insurance contracts are at 3%.10Government of New Brunswick. New Brunswick Code P-15 – Premium Tax Act The tax is calculated on gross premiums receivable after deducting policyholder dividends and returned premiums.
Nova Scotia
Life, accident, and sickness premiums are taxed at 3%. All other insurance is at 4%.11Government of Nova Scotia. Insurance Taxes
Prince Edward Island
Life, accident, and sickness insurance is taxed at 3.75%. All other insurance is at 4%. Mutual insurance companies meeting certain criteria pay a reduced 1.25% on all gross premiums. Reinsurance ceded by other licensed insurers, annuity considerations, returned premiums, and policyholder dividends are excluded from the tax base.12Government of Prince Edward Island. Premium Tax Act
Newfoundland and Labrador
A flat 5% insurance companies tax applies to all premiums generated in the province, with no differentiation by insurance type.13Government of Newfoundland and Labrador. Insurance Companies Tax This is the highest flat insurer-level rate in the country.
Yukon and the Northern Territories
Yukon charges a flat 4% on all insurance premiums, regardless of coverage type, calculated on gross premiums less dividends paid or premiums returned during the year.14Government of Yukon. Learn How to Submit Your Insurance Premium Tax Return The Northwest Territories and Nunavut also impose insurance premium taxes, but their rates and structures are not commonly published and may require direct inquiry with the territorial finance departments.
Provinces That Add Sales Tax on Top
The rates above are what insurers pay. Four jurisdictions add a second layer directly on the premium you pay, and this one usually appears as a separate line on your invoice.
Ontario
Ontario applies its 8% Retail Sales Tax to premiums under taxable insurance contracts, group insurance, contributions to funded benefits plans, and certain payments under unfunded benefits plans. Taxable coverage includes property insurance for risks in Ontario, group life insurance on mortgages, and employer-sponsored drug, dental, and vision plans. RST does not apply to compulsory automobile insurance, individual life and health insurance, reinsurance, surety bonds, or service and warranty contracts on tangible property.15Government of Ontario. Retail Sales Tax – Insurance and Benefits Plans The practical effect is that businesses and employers absorb most of this tax through property and group benefit plans, while individuals buying personal life or auto insurance avoid it.
Saskatchewan
Saskatchewan applies its 6% Provincial Sales Tax to all insurance premiums as defined under The Saskatchewan Insurance Act. Exemptions cover reinsurance, self-insurance, annuity contracts, and insurance purchased by Status Indians or Indian Bands for on-reserve property or activities.16Government of Saskatchewan. Provincial Sales Tax Combined with the insurer-level premium tax of 3% or 4%, Saskatchewan is one of the heavier combined tax loads in the country on general insurance.
Newfoundland and Labrador
Newfoundland and Labrador imposes a 15% Retail Sales Tax on insurance premiums covering property, risk, perils, or events in the province. The exemption list is long: life insurance, accident and sickness insurance, automobile insurance, commercial marine insurance, surety and fidelity insurance, residential mortgage default insurance, crop and livestock insurance, and personal property insurance including residential properties are all excluded.17Government of Newfoundland and Labrador. Retail Sales Tax (RST) on Insurance Premiums Frequently Asked Questions In practice the 15% hits mainly commercial property and liability coverage.
Quebec
Quebec’s 9% works as a combined insurer-and-consumer levy in practice. Where other provinces run two separate taxes, Quebec folds everything into the single rate, and neither GST nor QST is layered on top.9Revenu Québec. Tax on Insurance Premiums — Payment The tax also applies to premiums paid to the Société de l’assurance automobile du Québec for automobile insurance.
Insurance Placed With a Foreign Insurer
If you buy coverage from an insurer not licensed in Canada, or arrange it through a broker outside the country, a separate 10% federal excise tax applies under Part I of the Excise Tax Act. The rate is calculated on net premiums (gross premiums minus dividends received and premiums returned on cancellation), and it’s due by April 30 each year for premiums paid in the preceding calendar year.18Justice Laws Website. Excise Tax Act
Life insurance, personal accident insurance, sickness insurance, and insurance against marine risks are exempt. Coverage for nuclear risks may also be exempt to the extent the insurance is not available within Canada.18Justice Laws Website. Excise Tax Act The tax exists to discourage placing insurance offshore when comparable coverage can be bought in Canada.
What This Adds Up to on Your Policy
The total tax on any given policy comes down to three things: which province the risk sits in, what type of insurance it is, and whether the province adds a consumer-facing sales tax on top of the insurer-level premium tax.
A property insurance policy in Saskatchewan carries a 4% insurer premium tax, plus 6% PST, plus a possible 1% fire safety tax, so more than 10% of what you pay is tax. The same type of policy in Alberta carries only the 4% insurer premium tax with no additional sales tax. Individual life insurance receives the lightest treatment nearly everywhere: lower insurer-level rates, and most provinces exempt it from any retail sales tax. Group benefit plans provided by employers sit at the other end, often caught by both the insurer premium tax and the provincial sales tax in Ontario and Saskatchewan. For a business operating across provincial lines, the tax differential alone can shift the effective cost of coverage by several percentage points.