Sales tax in Ontario is the Harmonized Sales Tax, or HST, charged at a single rate of 13% on most goods and services. That rate combines a 5% federal component with an 8% Ontario component into one line on the receipt. Basic groceries, prescription drugs, and long-term residential rent carry no tax at all, and Ontario removes the 8% provincial portion automatically at checkout on a short list of everyday items including children’s clothing, books, diapers, and feminine hygiene products.
How the 13% Splits
Ontario merged its provincial sales tax with the federal Goods and Services Tax, so a single 13% HST replaces what used to be two separate charges. The Canada Revenue Agency collects the whole amount and passes Ontario’s 8% share to the province.1Canada Revenue Agency. GST/HST Calculator (and Rates) The rules live in the federal Excise Tax Act, which sets out what’s taxable, what’s exempt, and how the CRA enforces the system.2Department of Justice Canada. Excise Tax Act
What You Pay 13% On
The default rule is simple. If you’re buying something and it hasn’t been specifically carved out, you’re paying 13%. That covers most tangible goods: electronics, clothing, furniture, cosmetics, appliances, vehicles from a dealership, tools, and everything else you’d pull off a shelf.
Services are treated the same way. Legal fees, accounting, home renovations, plumbing and electrical work, and real estate commissions all carry the 13% charge.3Canada Revenue Agency. GST/HST and Home Construction Digital subscriptions from foreign providers, including streaming services and cloud platforms, are also taxed. Since July 2021, non-resident digital sellers have had to register with the CRA under a simplified framework and collect HST from their Canadian customers.4Canada Revenue Agency. Register for the GST/HST – Digital Economy
Goods coming into Ontario are taxed too. On commercial imports, the Canada Border Services Agency assesses the 13% at the border.5Canada Border Services Agency. Importing Goods Into Canada On personal orders shipped from abroad, the carrier or postal service usually collects it when the package arrives.
What You Don’t Pay 13% On
Two groups of goods and services escape the 13% rate. From the shopper’s side they look identical, but they work differently for the businesses selling them.
Zero-Rated: Taxed at 0%
Zero-rated items are technically taxed, just at a rate of 0%. Basic groceries such as milk, bread, and fresh vegetables fall here, along with prescription drugs and certain medical devices like hearing aids.6Canada Revenue Agency. General Information for GST/HST Registrants Exports are zero-rated as well. Businesses selling zero-rated goods can still claim input tax credits to recover HST they paid on their own costs.7Canada Revenue Agency. Type of Supply
Exempt: No Tax, No Recovery
Exempt supplies carry no tax at all, and the seller cannot recover HST on business inputs. Most health care services provided by physicians and dental hygienists are exempt. Long-term residential rent (generally a month or more) is exempt, which is why landlords don’t add HST to the monthly rent. Child care for children 14 and under is also exempt.8Department of Justice Canada. Excise Tax Act – Schedule V
Music lessons are a common source of confusion. They’re only exempt in narrow circumstances: when a public sector body such as a municipal recreation department runs a program aimed primarily at children 14 and under, or at underprivileged individuals or people with a disability.8Department of Justice Canada. Excise Tax Act – Schedule V Lessons following a curriculum designated by a school authority also qualify.9Department of Justice Canada. Equivalent Courses (GST/HST) Regulations Private lessons from a for-profit teacher to adult students are generally taxable.
Items Where Ontario Refunds the 8% at the Register
Ontario applies automatic point-of-sale rebates that strip the 8% provincial portion off certain purchases. You still pay the 5% federal share, but the rebate happens instantly with no forms to file.10Canada Revenue Agency. GST/HST and First Nations Peoples The qualifying categories are:
- Children’s clothing up to and including girls’ Canada Standard Size 16 and boys’ Size 20, and footwear up to girls’ and boys’ size 6.
- Printed books, audiobooks that are spoken readings of a printed book, and scriptures of any religion.
- Cloth and disposable diapers, diaper inserts, liners, rubber pants, and training pants.
- Children’s car seats and booster seats.
- Newspapers.
- Feminine hygiene products, including tampons, sanitary napkins, and menstrual cups.
Prepared food and beverages also qualify, but only when the total price before tax is $4 or less. Buy a muffin and coffee that come to $3.75, and you pay the 5% federal portion only. Cross $4 before tax and the full 13% applies.12Canada Revenue Agency. Harmonized Sales Tax for Ontario – Point-of-Sale Rebate on Prepared Food and Beverages
Buying a Used Vehicle Privately
A vehicle bought from a dealership is charged 13% HST like any other retail purchase. A private sale between two individuals works differently. The buyer pays 13% Retail Sales Tax directly to the province when registering the vehicle, not to the seller. The tax is calculated on the purchase price or the vehicle’s Canadian Red Book wholesale value, whichever is higher.13Government of Ontario. Buy or Sell a Used Vehicle in Ontario
This catches buyers off guard. If you pay $5,000 for a 10-year-old car but the Red Book pegs it at $7,500, tax comes off the $7,500 figure. If you think that value is too high, you can get the vehicle professionally appraised before the ownership transfer, and the tax will be based on the higher of your purchase price and the appraised value.13Government of Ontario. Buy or Sell a Used Vehicle in Ontario
New Home Purchases and Rebates
Buying or building a new home in Ontario means paying 13% HST on the full purchase price, but rebates offset a meaningful piece of the cost. There are two of them, one federal and one provincial.
The federal new housing rebate covers part of the 5% GST component. For homes priced at $350,000 or below, the maximum rebate is 36% of the GST paid, up to about $6,300. It phases out gradually between $350,000 and $450,000 and disappears above $450,000. Only individuals buying a primary residence qualify; corporations and partnerships don’t.14Canada Revenue Agency. GST/HST New Housing Rebate
The provincial rebate covers the 8% Ontario portion. Under the standing rules, it caps at $24,000 regardless of the home’s price. The 2026 Ontario Budget proposed a temporary enhancement that would raise the maximum provincial rebate to $80,000 for qualifying new homes valued up to $1 million, with a linear reduction between $1 million and $1.85 million.15Government of Ontario. Annex: Details of Tax Measures and Other Legislative Initiatives Ontario has passed the HST Relief Implementation Act to authorize enhanced provincial rebates of up to $50,000.16Legislative Assembly of Ontario. HST Relief Implementation Act (Residential Property Rebates), 2026 Reaching the full $80,000 figure requires further federal cooperation through amendments to the Excise Tax Act. The enhanced rebates are intended to apply from April 1, 2026 to March 31, 2027.
Credits That Come Back to You
Ontario and the federal government both pay quarterly credits to help lower-income residents offset the sales tax they pay through the year. You don’t apply for either one separately. Filing your annual tax return determines eligibility automatically.
For the July 2026 to June 2027 payment period, the Ontario Sales Tax Credit provides up to $378 per adult and per child in the family. For single individuals with no children, the credit begins to phase out at 4% of adjusted net income above $29,047. For couples and single parents, the phase-out starts at a family net income of $36,309.17Canada Revenue Agency. Province of Ontario
The federal GST/HST credit stacks on top. For the July 2025 to June 2026 period, it pays up to $533 for a single individual, $698 for a married or common-law couple, and $184 for each child under 19.18Canada Revenue Agency. How Your GST/HST Credit Is Calculated Between the two, eligible individuals and families can receive several hundred dollars a year.
If You Run a Business: When You Have to Register
Not every business in Ontario has to collect HST. Under the small supplier rule, you’re exempt from registration as long as your total taxable revenue stays at $30,000 or less over four consecutive calendar quarters.19Canada Revenue Agency. When to Register for and Start Charging the GST/HST Public service bodies get a higher threshold of $50,000.20Canada Revenue Agency. GST/HST Memorandum 2.2 – Small Suppliers
The moment you cross that line, you must register and start charging 13% on the sale that pushed you over. Waiting until the next quarter isn’t an option, and if you fail to register when required you owe the uncollected tax out of pocket.19Canada Revenue Agency. When to Register for and Start Charging the GST/HST Voluntary registration below the threshold can still be worthwhile because it lets you claim input tax credits on business expenses like equipment, supplies, and rent.
Once you’re registered, filing is mandatory even in periods with no revenue. Since 2024, almost all registrants must file electronically.21Canada Revenue Agency. Reporting Requirements and Deadlines Late filing carries a penalty of 1% of the amount owing plus 0.25% of that amount for each full month the return is overdue, up to 12 months, with a maximum of 4% of the balance.22Canada Revenue Agency. GST/HST Filing Penalties The CRA also charges interest on unpaid amounts at a prescribed rate, set at 7% annually as of mid-2026 and compounded daily.23Canada Revenue Agency. Interest Rates for the Third Calendar Quarter The rate changes quarterly.