Your Questions Answered

General

Why the HST?
How does the HST work?
Does the government collect more money because of this tax?
Was it the right time to be bringing in a harmonized sales tax?
What is a value-added tax?
How do the tax changes help our economy?
Are there other tax changes in addition to the HST?

Consumers

How are consumers affected by the HST?
Am I paying more taxes?
Will businesses really pass on the savings to consumers?
What is the "hidden tax"? And, how does the HST eliminate the hidden tax?
What do I have to pay tax on as of July 1, 2010?
Don't certain things cost more?
Are there HST exemptions and rebates for consumers?
How does the government provide Ontario taxpayers with assistance to transition to the HST?
How was the HST applied to consumer purchases that straddle July 1, 2010?
How does the HST affect purchases made by Status Indians both on and off reserve?

Families/Individuals

How does the tax changes help Ontario taxpayers?
What kind of support is being provided to low-income families?
What tax benefits am I eligible for?
Have personal income tax rates changed?
Am I eligible to receive the new Ontario Energy and Property Tax Credit?
Am I eligible to receive the new Ontario Sales Tax Credit?

Businesses

How does this help Ontario's businesses – both large and small?
What rules were provided to help get ready?
Did the government provide businesses with assistance to transition to the HST?
Do I have to register to collect the HST?
What tax benefits are businesses eligible for?

Seniors

How will the tax changes help seniors?
How can seniors find out what tax benefits they are eligible for?

Homebuyers

Is there HST on the purchase of new homes and resale homes?
Are condominium maintenance fees subject to the HST?

Retail Sales Tax (RST) Vendors

Tobacco Wholesalers and Retailers

Tobacco retail dealer's permit

1. Why the HST?

Ontario's comprehensive tax package, including the harmonized sales tax, will create jobs by making Ontario more competitive, reduce business taxes and provide personal tax relief.

Times have changed. We've seen the biggest global economic downturn in 80 years. If we want Ontario to remain strong, we must change too.

We needed to be more competitive to attract more investment and jobs. We needed to protect those important services like health care and education we've worked so hard to build.

Many economists and businesses agree that the most important thing we could do was to get rid of the double sales tax system that puts our businesses at a competitive disadvantage and, at the same time, substantially cut income tax for people, small businesses and corporations.

We had a choice: we could have refused to fix what's broken and resign ourselves to the idea that Ontario will be less competitive, or we could move forward and hold firm to the conviction that Ontario can emerge stronger than ever before.

2. How does the HST work?

The fact is, Ontario's former tax structure that included the Provincial Sales Tax (PST) hurt job creation.

Previously, the PST was charged on most purchases made by businesses in manufacturing goods and providing services. It penalized business by generally taxing them at every step in the production, distribution and retail processes – making the PST a tax on a tax on a tax.

The PST resulted in about $4.5 billion in embedded taxes, hidden in the cost of doing business in Ontario. It drove up costs to consumers and was a big disadvantage to Ontario's businesses. Most countries we compete with for jobs don't have that disadvantage.

The HST removes this hidden tax by refunding sales taxes paid on most business inputs. These refunds mean lower prices for many consumer purchases and lower business costs, which experts agree will result in increased business investment, more jobs and higher incomes.

3. Does the government collect more money because of this tax?

As a result of the comprehensive tax measures announced in the 2009 Ontario Budget, not including federal assistance, there will be an estimated overall reduction of $3.4 billion in tax revenue over four years. These measures include a personal income tax cut for 93% of Ontario income tax payers.

The Budget measures create a balanced tax package for people and businesses that makes our economy more competitive when we emerge from this recession.

Find out more about what the tax package means to families and businesses.

4. Was it the right time to be bringing in a harmonized sales tax?

We have witnessed the first world-wide recession in generations. It wasn't created here, but like every country we're feeling its effects. Now as we see signs of recovery, we face an important choice.

Our former dual sales tax system put our businesses at a competitive disadvantage. It was a disadvantage we could no longer afford.

Many economists and businesses say that adopting a value-added sales tax like the HST is the most important thing we can do to strengthen Ontario's economy.

Together with our tax cuts, the HST will attract investment and jobs, and it will also help protect high quality public services, like health care and education, that make Ontario a better place to live.

In more than 150 countries and four other provinces, a value-added sales tax like the HST is already a fact of life. Following Ontario's lead, B.C. also adopted the HST so its businesses would not be left behind. It is modern, efficient and necessary to compete in today's changing world.

Find out more about what the tax package means to families and businesses.

5. What is a value-added tax?

Previously, the PST was paid by most businesses on various costs throughout the supply chain. In other words, though you may not have realized it, the PST was charged multiple times on various costs before a product reaches the store.

That embedded, hidden tax drove up costs to consumers and was a big competitive disadvantage to Ontario's businesses. More than 150 countries – countries we compete with for investment and jobs – don't have that disadvantage.

Under the HST, most taxes paid on business inputs are refunded to the businesses through input tax credits, generating savings from removing the former embedded PST – savings that can be passed along to consumers.

For example, when Newfoundland and Labrador, Nova Scotia and New Brunswick harmonized their sales tax with the federal GST, cost savings were passed through to the consumer. The same is expected to happen in Ontario, leading to lower prices for some products.

6. How do the tax changes help our economy?

Thanks to these tax changes, Ontario now has one of the most competitive environments in the industrialized world for business investment and that means greater prosperity for our families.

A report by economist and tax expert Jack Mintz estimates that these tax changes, together with other recent tax measures, will lead to $47 billion in increased capital investment and create 591,000 new jobs within 10 years.

7. Are there other tax changes in addition to the HST?

The plan contained a fair and balanced package of tax cuts for people and businesses.

For people, the tax rate on the first income tax bracket was reduced from 6.05 per cent to 5.05 per cent on January 1, 2010. As a result, 93 per cent of income tax payers pay less personal income tax. In addition, two new tax credits – the Ontario Sales Tax Credit (OSTC) and Ontario Energy and Property Tax Credit provides $1.3 billion in additional sales and property tax relief compared to the old credits they replace. Ontarians also receive temporary Sales Tax Transition Benefit payments in June 2010, December 2010 and June 2011 totaling up to $1,000 for families (including single parents) and up to $300 for single people to help them adjust to the HST.

Find out more about what the tax package means to consumers and families.

8. How are consumers affected by the HST?

Some purchases cost more because some goods and services that were not subject to the PST are now subject to the provincial portion (eight per cent) of the HST. However, 83 per cent of consumer expenditures do not have a new tax. In fact, several items, prices are expected to come down. Learn more

9. Am I paying more taxes?

In 2010, 93 per cent of Ontario income tax payers received a permanent personal income tax cut. On January 1, 2010, the first income tax bracket was reduced from 6.05 per cent to 5.05 per cent, making it the lowest provincial tax rate in Canada on the first $37,106 of taxable income.

The province will provide $12 billion over three years in temporary and permanent tax relief for the people of Ontario, and $4.8 billion over three years in tax relief for businesses.

10. Will businesses really pass on the savings to consumers?

Previously, most businesses paid PST on many items that form part of the cost of doing business. The added cost of the PST was then passed on to consumers in the form of higher prices.

The HST generally eliminates this hidden PST because most sales taxes paid on business inputs are now refunded to the business through what are called "input tax credits". These tax credits are savings for the business that could be passed on to consumers through lower prices.

When Newfoundland and Labrador, Nova Scotia and New Brunswick harmonized their sales tax with the federal GST, cost savings to business were passed through to consumers. The same is expected to happen in Ontario's highly competitive economic environment.

A study by the TD Bank estimates that about 80 per cent of the cost savings to business will be passed on in the first year the HST comes into effect, rising to 95 per cent by the third year. The report notes that "(i)n order for businesses to generate an increase in demand for their products they will have to pass those savings onto consumers."

Find out more about what the tax package means to consumers.

11. What is the "hidden tax"? And, how does the HST eliminate the hidden tax?

Previously, PST (also called RST) was applied at every step in the creation of a product. Those multiple PST charges were embedded in the price you paid at the store – even though you couldn't see it. And of course, you paid PST on the final purchase price. Under the HST system, most of those embedded costs are removed and savings can be passed on to the consumer. Find out more about eliminating hidden taxes.

12. What do I have to pay tax on as of July 1, 2010?

In general, a harmonized sales tax rate of 13 per cent applies to all goods and services that were subject to GST.

The HST is not charged on the following items that were not subject to PST:

Basic groceries
Prescription drugs
Some medical devices
Municipal public transit
Health and education services
Legal aid
Most financial services
Child care
Tutoring
Music lessons
Residential rents

Consumers do not have to pay the provincial portion (eight per cent) of the HST for:

Qualified prepared food and beverages sold for a total of $4 and under
Print newspapers
Children's clothing and footwear
Children's car seats and car booster seats
Diapers
Feminine hygiene products
Books (including audio books)

Find out more about what the tax package means to consumers and families.

13. Don't certain things cost more?

Some purchases cost more because some goods and services that were not subject to the PST are now subject to the provincial portion (eight per cent) of the HST. However, 83 per cent of consumer expenditures do not have a new tax. In fact, for several items, prices are expected to eventually come down. Learn more

We're providing $12 billion over three years in tax relief for people, including permanent personal income tax cuts and direct payments to Ontarians.

Replacing the provincial sales tax (PST) will help eliminates the hidden sales tax that many products carry.

Now that the PST is replaced with the HST, businesses, in general, will pay less tax, generating savings that they'll be able to pass along to consumers in the form of lower prices.

Find out more about what the tax package means to consumers.

14. Are there HST exemptions and rebates for consumers?

In general, the harmonized sales tax rate of 13 per cent applies to all goods and services that were previously subject to GST.

The HST is not charged on the following items that were not subject to PST:

Basic groceries
Prescription drugs
Some medical devices
Municipal public transit
Health and education services
Legal aid
Most financial services
Child care
Tutoring
Music lessons
Residential rents

Consumers do not have to pay the provincial portion (eight per cent) of the HST for:

Qualified prepared food and beverages sold for a total of $4 and under
Print newspapers
Children's clothing and footwear
Children's car seats and car booster seats
Diapers
Feminine hygiene products
Books (including audio books)

Buyers of new homes receive a rebate of up to $24,000 regardless of the price of the new home.

Buyers of new residential rental properties receive a similar rebate.
The HST does not apply to purchases of resale homes.

Find out more about what the tax package means to consumers and families.

15. How does the government provide Ontario taxpayers with assistance to transition to the HST?

To help people, the Ontario government is providing $12 billion in personal tax relief over three years. This includes tax-free payments to help individuals and families (including seniors) transition to the HST:

Eligible families - including single parents and senior couples - with adjusted family net incomes $160,000 or less receive three payments totaling $1,000.
Eligible individuals with adjusted family net incomes $80,000 or less receive three payments totaling $300.
For families and individuals with higher incomes, each of the three maximum benefit payments are reduced by 5 per cent of income over the thresholds specified above.

These transition payments are delivered to eligible Ontario tax filers aged 18 and over or who have a spouse or common-law partner or live with their child in June 2010, December 2010 and June 2011.

Find out more about what the tax package means to individuals and families.

16. How was the HST applied to consumer purchases that straddle July 1, 2010?

For purchases made starting May 1, 2010, consumers are charged the 13% HST for goods received or services performed after June 30, 2010.

For example: In May 2010, a person made a partial payment to purchase furniture. Under the agreement, the person took delivery of the furniture in July 2010, makes 12 additional monthly payments between July 2010 and June 2011, and receives ownership of the furniture when all the payments have been made. The HST applies to the sale of the furniture.

Find out more about transitional rules or call 1 800 337-7222.

17. How does the HST affect purchases made by Status Indians both on and off reserve?

Under the HST, as with the federal goods and services tax, goods purchased by Status Indians on a reserve (or off-reserve for delivery to a reserve by the vendor) are exempt from tax.

Prior to the HST implementation, Ontario provided a point-of-sale PST exemption to Status Indians who purchased goods off-reserve and self-delivered them to a reserve for consumption there. The point-of-sale exemption of the provincial portion (eight per cent) of the HST continues.

18. How does the tax changes help Ontario taxpayers?

To help Ontarians, the government is providing $12 billion in personal tax relief over three years.

93 per cent of Ontario income tax payers received a permanent personal income tax cut on January 1, 2010.
A new Ontario Sales Tax Credit provides up to $260 a year for each adult and each child in low- to middle-income families. A new Ontario Energy and Property Tax Credit provides an additional $525 million in property tax relief annually to low- to middle-income Ontario homeowners and tenants.
Eligible families (including single parents and senior couples) with annual adjusted family net incomes of $160,000 of or less receive three tax-free payments totaling $1,000.
Eligible single people (including single seniors) with annual adjusted net incomes of $80,000 or less receive three tax-free payments totaling $300.

Find out more about what the tax package means to families and consumers.

19. What kind of support is being provided to low-income families?

To help low- to middle- income individuals and families, the Ontario government is providing $12 billion in personal tax relief over three years.

Eligible families (including single parents and senior couples) with annual adjusted net incomes up to $160,000 receive three tax-free payments totaling $1,000.
Eligible single people with annual adjusted net incomes up to $80,000 receive three tax-free payments totaling $300.
Starting in August 2010, almost 3.1 million low- to middle-income Ontario families received a permanent sales tax credit of up to $260 for each adult and each child per year - one of the most generous in Canada.
A new Ontario Energy and Property Tax Credit provides an additional $525 million in property tax relief annually to low- to middle-income Ontario homeowners and tenants.
90,000 lower-income Ontario tax payers no longer pay any provincial personal income tax.
93 per cent of Ontario income tax payers received a permanent personal income tax cut on January 1, 2010.

20. What tax benefits am I eligible for?

The comprehensive tax package provides $12 billion over three years in temporary and permanent tax relief for people, as well as $4.8 billion over three years in business tax relief.

Find out more about the tax benefits you or your family may be eligible to receive using the tax credits calculator.

You can also call the ministry at 1 800 337-7222 to find out more about the tax benefits you or your business may be eligible to receive.

21. Have personal income tax rates changed?

The 2009 Budget provides $12 billion in tax relief to Ontarians over three years through Personal Income Tax (PIT) cuts, enhancements to the sales and property tax credits, and help for consumers with the move to the HST.

On January 1, 2010, the government cut the first tax bracket rate from 6.05 per cent to 5.05 per cent on the first $37,106 of taxable income – the lowest provincial rate in Canada.

For 2010, 93 per cent of Ontarians received a permanent PIT cut and approximately 90,000 lower-income taxpayers no longer pay any provincial personal income tax.

The PIT changes announced in the Budget benefit about 4.3 million individuals and families in Ontario, providing more than $1.1 billion annually in broadly based PIT cuts.

Find out more about what the tax package means to individuals and families.

22. Am I eligible to receive the new Ontario Energy and Property Tax Credit?

In 2010 the government introduced two new, separate and enhanced tax credits — the Ontario Sales Tax Credit and the Ontario Energy and Property Tax Credit — which replaced the combined property and sales tax credits.

The enhanced Ontario Energy and Property Tax Credit is paid to low- to middle-income Ontario homeowners and renters. Seniors can claim up to $625 plus 10 per cent of occupancy cost. Non-seniors can claim up to $250 plus 10 per cent of occupancy cost. The maximum credit is $1,025 for seniors and $900 for non-seniors.

Like the former property tax relief, it is based on occupancy cost — that is, property tax paid or 20 per cent of rent paid.

The 2010 income thresholds for the credit are $20,000 for non-senior single people and $25,000 for non-senior couples and single parents. The 2010 income thresholds for single seniors and senior couples are $25,000 and $30,000, respectively. The credit is reduced by 2% of adjusted family net income over these thresholds.

To be eligible for the 2010 Ontario Energy and Property Tax Credit a 2010 income tax return must be filed.

Find out more about what the tax package means to individuals and families.

You can also call us at 1 800 337-7222 to find out more about the Ontario Energy and Property Tax Credit.

23. Am I eligible to receive the new Ontario Sales Tax Credit?

Beginning in August 2010, the Ontario Sales Tax Credit is paid quarterly. The tax credit will provide about 3.1 million low- to middle-income families and individuals with annual assistance of up to $260 for each adult and each child.

The 2010 income thresholds for the credit are $20,000 for single people and $25,000 for families (including single parents). The credit is reduced by 4% of adjusted family net income over these thresholds.

To apply for the payments that began in August 2010, you must file a 2009 income tax return.

Find out more about what the tax package means to individuals and families.

You can also call us at 1 800 337-7222 to find out more about the Ontario Sales Tax Credit.

24. How does this help Ontario's businesses – both large and small?

Beginning July 1, 2010, Ontario's businesses deal with one sales tax instead of two, one set of rules instead of two and one level of government instead of two.

Previously, provincial sales tax was paid by most businesses at each step in the creation of a consumer product. In other words, although it was hidden and you may not have realized it, the PST was charged multiple times during the production of a product before that product reached the final consumer. So the PST was a tax on a tax on a tax, all hidden in the cost of a product until it reached the consumer.

That embedded, hidden tax drove up costs to consumers and was a big disadvantage to Ontario's businesses. More than 150 countries – countries we compete with for jobs – don't have that disadvantage.

Under the HST, most taxes paid on business inputs are refunded to the business -- savings that can be reinvested and passed on to consumers, improving the competitiveness of Ontario businesses and supporting jobs.

In addition, the capital tax was eliminated on July 1, 2010 and the comprehensive tax package includes significant tax relief for businesses, such as cuts to corporate income tax for large and small businesses.

Find out more about how businesses will benefit.

25. What rules were provided to help get ready?

To help business prepare for the HST, general transitional rules for the HST were made available. Additional transitional rules have also been released for new housing.

26. Did the government provide businesses with assistance to transition to the HST?

To support small businesses, Ontario provided up to a total of $400 million in one-time transition assistance to small business in the form of transition support.

Most businesses, other than financial institutions, with less than $2 million in annual revenue from taxable sales, were eligible for the Small Business Transition Support Payment of up to $1,000.

27. Do I have to register to collect the HST?

Businesses that were registered for GST are required to collect the HST.

To reduce the administrative burden for small businesses, Ontario parallels the federal small supplier threshold. In general, businesses with sales under the threshold (those with total taxable sales of $30,000 or less in the last year or $50,000 or less in the case of a public service body) are not required to register and collect tax.

Small suppliers that choose not to register are not required to file a tax return and cannot claim input tax credits. If a small supplier chooses to register, it is eligible to claim input tax credits related to its taxable supplies when it files its tax return.

28. What tax benefits are businesses be eligible for?

The comprehensive tax package provides $12 billion over three years in temporary and permanent tax relief for people, as well as $4.8 billion over three years in business tax relief.

29. How will the tax changes help seniors?

Seniors benefited from the measures aimed to help with the transition to the HST:

93 per cent of Ontario income tax payers received a permanent income tax cut.
Eligible senior couples with up to $160,000 of annual adjusted net income receive three payments totaling $1,000. Single seniors with $80,000 of annual adjusted net income get three payments totaling $300.
A new refundable Ontario Sales Tax Credit, similar to the GST credit, is provided for people with low to middle incomes.
Eligible low-income senior homeowners and tenants can receive a new Ontario Energy and Property Tax Credit of up to a maximum of $1,025.
The Senior Homeowners' Property Tax Grant was doubled in 2010 to help low- to- middle income senior homeowners offset the cost of property taxes. For 2009, the maximum grant is $250. For 2010 and subsequent years, the maximum grant will be $500.
The HST will not be charged on some items, including basic groceries, prescription drugs and medical devices.

Find out more about how the tax changes will affect seniors. Or call us at 1 800 337-7222.

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