How Much Is Sales Tax In Ontario? (2023)

A sales tax is an easy system in Ontario. It’s a consumption tax levied or enforced by the government on goods and services sold. A sale tax is applied to the goods and services purchased and the sales of goods and services. It’s a consumption tax because it charges people for spending money.

The rate of sales tax in Ontario is 13% of harmonized sales tax on purchases, which means the total sales tax rate is 13%. However, 13% of harmonized sales came into existence on July 1, 2010, in the province of Ontario. It is the combination of goods and services tax of 5% (GST) and 8% of provincial tax.

The sales tax in Ontario is a kind of indirect tax, which implies that the payment is not made directly to the government. The retailers get or collect the sales tax from customers then transmit them to the suitable government entity. This tends to make one of the largest sources of tax revenue in Ontario.

Sales tax in Ontario applies and are a charge on individuals, parties, corporation. The province of Ontario harmonized the goods and services taxes and provincial taxes. Sales tax is mostly charged on goods and services in Ontario at the rate of 13% which includes 5% federal part and 8% of provincial part.

How much is sales tax in Ontario?

The amount of sales tax in Ontario is calculated by using 13% harmonized sales tax on goods and services. For example:

$200 + 13% HST = $ 213 total. A sales tax calculator can be used to calculate the exact amount of sales tax to be collected on goods and services sold or purchased. Furthermore,

Sales tax in Ontario is a consumption tax expected to be paid to the government.

The amount of sales tax to be charged on goods and services depends on the place of supply. Some rules are attached to determine if a supply is made from inside or outside a specific province. The place of supply rules contains the address for the receiver of a service.

For example, a Nova Scotia resident who bought a car in Florida would be charged to pay the local sales tax, as though it was bought at home.

Although some supplies are regarded to be zero-rated which implies that harmonized sales tax is at 0% and it won’t be charged but input tax credit can still be claimed for HST payable on the service.

There are several ways of collecting and remitting sales tax in Ontario. The following explicit the required methods to make sales tax payments in Ontario.

1. The use of a normal method and a fast method

The normal method is also known as the regular method previously named the general method. This entails keeping track of the harmonized sales tax gathered from each business transaction. You proceed by adding up the taxes on allowable business expenses then you deduct it from the total harmonized sales tax collected from customers.

The fast method also known as the quick method doesn’t demand tracking the exact amount of harmonized sales tax received on each sale and it doesn’t require claiming the input tax credit. It only involves paying a set rate of percentage of the total sales to CRA

The rate relies on your type of business, business location, and annual sales. This method assumes that the collection of HST is more than the payment.

2. Pay electronically

After the collection of the sales taxes using the above methods. Then you can pay through electronics means making use of financial institutions online. Remittance vouchers are not required to make payments online.

Also, you can pay electronically by using my payment option on CRA. Businesses and individuals are enabled to make payments online through an account at a financial institution (Bank) making use of the CRA website. You can check online for more necessary information.

3. Pay through financial institutions

Another method is to pay through available financial institutions. After filing electronically then you can proceed by remitting at your financial institution.

You can use the form RC 159, remittance voucher- amount owing, to pay an amount owing, you also use RC 158, remittance voucher-payment to file the payment of the amount owing and other remember forms for making payment

These remittance forms can not be found on the CRA’s website because they can only be obtainable in a pre-printed format. You can check online for more information.

Reasons for Sales Tax in Ontario

Sales taxes perform a crucial part in the growth and development of the local communities. The following are reasons for sales tax in Ontario.

1. Development of the community

Collection of sales tax assists in the building of the community. It enhances and fosters the growth and development of the community. This development includes roads and bridges, construction of public buildings and drainages, and development of infrastructures.

This is one of the important reasons for collecting sales tax because it’s for society’s welfare and satisfaction.

2. Rendering public services

Public services include parks, schools, public libraries, and other related services. Many people in society make daily use of the service to satisfy their wants. Government makes a budget to ensure that this service is rendered generally without focusing on only one aspect.

3. Provision of protective services

These protective services specifically include police and the firefighter department. This service is rendered to the community to protect, prevent and profer to any natural or artificial casualties. The sales tax collected helps the government to render this service to the community.

4. Generation of revenue

The collection of sales tax in Ontario aids revenue generation to the government. This helps the government to redistribute wealth to the rich and poor and also to settle the government bills like immigration services, diplomatic services, and other services.

5. Perform some special purpose

The Government uses the sales tax collected to perform some special purpose projects. Governments make use of special purpose local option sales tax (SPLOST) to perform special projects. Most of the SPLOST projects are within a short period of time, sales tax is used for the completion of the project.

Requirements for sales tax in Ontario

  • You will need to know the sales tax rate of your province
  • You must meet the requirements for registration
  • You will need to register with the agency in charge

Read Also:

Who are the people eligible to pay sales tax in Ontario?

Sales tax is levied on suitable goods and at the place of purchase by the customer. Then it’s

remitted or paid by the company to the Canada revenue agency.

Are there exemptions to sales tax in Ontario?

There are several exemptions which mean no harmonized sales tax (HST). Such exemptions are legal aid services, child care services, music lessons, tutoring services, etc.

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