Yes, there is a tax on home insurance in Ontario. The province charges an 8% Retail Sales Tax (RST) on the premium, collected by your insurer and sent to the government on your behalf. On a policy costing about $1,500 a year, that works out to roughly $120 in tax. The same 8% rate applies whether you own a house, own a condo, or rent an apartment.
How the 8% Retail Sales Tax Works
Section 2.1 of Ontario’s Retail Sales Tax Act sets the rate at 8% of the premium on any insurance contract covering property or a risk located in the province.1Ontario.ca. Retail Sales Tax Act, R.S.O. 1990, c. R.31 The tax applies to the full premium, including optional endorsements or riders such as sewer backup coverage, jewelry floaters, or earthquake protection. When the premium goes up, the tax goes up proportionally.
Your insurer collects the RST and remits it to the province. You don’t file anything separately or send a payment to the government yourself.
Why It’s 8% Instead of 13%
Most goods and services in Ontario carry the 13% Harmonized Sales Tax, which combines a 5% federal GST with an 8% provincial component. When Ontario adopted the HST in 2010, it kept insurance premiums outside that system.2Government of Ontario. Harmonized Sales Tax Insurance stayed under the older Retail Sales Tax framework instead.
The federal 5% doesn’t apply either, because financial services, including insurance, are exempt supplies under the federal Excise Tax Act.3Department of Justice Canada. Excise Tax Act RSC 1985 c E-15 – Schedule V, Part VII Ottawa doesn’t tax insurance premiums, so only Ontario’s 8% provincial rate hits your bill.
What the Tax Covers and What It Doesn’t
The 8% RST reaches most property and casualty insurance. Home insurance, tenant insurance, condo insurance, and landlord insurance policies all fall under it, as does standalone personal property coverage. If the contract insures property or a risk in Ontario, the tax applies.1Ontario.ca. Retail Sales Tax Act, R.S.O. 1990, c. R.31
Individual life insurance and individual health insurance are exempt, provided they are not group policies or trip cancellation policies.4Government of Ontario. Insurance and Benefits Plans – Retail Sales Tax A separate life insurance policy carried alongside your home insurance won’t show the 8% charge. Group insurance plans are taxable, including group life insurance tied to a mortgage.
This matters when you bundle products through the same insurer. Your home insurance premium will always carry the 8% tax. An individual life or health policy bundled alongside it will not. Your declaration page should show each line taxed correctly.
How the Tax Appears on Your Bill
The 8% RST shows up as a separate line item on your policy documents, broken out from the base premium. If your base premium is $1,400, you’ll see $112 in RST listed below it.
The tax follows whatever payment schedule you choose. Pay the annual premium upfront and the full tax is due at once. Choose monthly installments and the insurer spreads the tax across each payment. You won’t receive a separate tax bill or track remittance deadlines.
When comparing quotes, look at base premiums rather than totals. Every insurer applies the same 8% rate, so any difference in the tax line just reflects the difference in the underlying premium.
When You Can Deduct the Premium and the Tax
For a standard owner-occupied home, your insurance premium and the RST on it are personal expenses. You cannot deduct them on your income tax return. Two situations change that.
Rental Properties
If you own a rental property in Ontario, you can deduct the insurance premiums on that property as a rental expense on Form T776. The Canada Revenue Agency allows you to deduct the portion that applies to the current tax year. If you prepay a multi-year policy, you claim only the current year’s share and spread the rest across the remaining years.5Canada.ca. Rental Expenses You Can Deduct
Business Use of Your Home
If you run a business from your home, you can deduct the business-use portion of your home insurance as an operating expense. The CRA expects a reasonable calculation, typically the square footage of your workspace divided by the home’s total area. If you also use that space for personal living, you reduce the claim further based on the hours per day you use it for business.6Canada.ca. Business-Use-of-Home Expenses A dedicated office taking up 15% of your floor area means 15% of your home insurance premium becomes deductible.
In both cases, the RST paid on the deductible portion of the premium is part of the overall expense and gets captured alongside the base premium.
Lowering the Tax by Lowering the Premium
The 8% rate is fixed, so the only way to shrink the tax is to shrink the premium it sits on. Bundling home and auto insurance with the same company often produces a multi-policy discount. Installing monitored security systems, upgrading old wiring or plumbing, and raising your deductible all tend to bring the base premium down. Shopping the market every couple of years helps too, because insurers re-price risk models regularly.
Every dollar off the base premium also saves you eight cents in RST. On a $200 annual reduction, that’s an extra $16 back each year on top of the premium savings.