Does auto insurance include HST?

UPDATED: Aug 7, 2013

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Asked August 7, 2013

1 Answer

In Canada, two different types of sales taxes in some provinces are being combined into a single tax to make it easier for people, companies, and the government to calculate. The two taxes involved are the federal Goods and Services Tax (GST) and the Provincial Tax, which is similar to the state sales tax in the U.S. The United States does not have a federal sales tax, so there is no comparison for the GST. When combined, these taxes will be called the Harmonized Sales Tax or HST for short.

A number of things are included in the tax, while many others are not. Basically, nothing new is being added into the taxation, and the combination should actually lower the taxes paid by many, and could result in rebates for low to moderate income families. The purpose is to reduce taxation and to encourage the growth of new jobs.

Among the things that are not included in the HST are necessities such as heating oil, clothing, footwear and educational materials. Where your vehicle is concerned, HST will either decrease the amount of taxation or leave it unchanged. For example, auto parts and vehicle leasing will see an overall decrease in taxes. Auto insurance, which is not taxed already, will remain unchanged under HST.

Because auto insurance is a function of government in Canada, it is not taxed at all under the existing GST and PST taxes. HST will not affect auto insurance because it is both a government fee and because HST does not institute any new taxation. Its purpose is to simplify existing tax systems and reduce the cost of living and business operation. If auto insurance had been taxed previously, it would see a reduction under HST, but it will, instead remain unchanged.

Answered August 7, 2013 by Anonymous

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