Costs, Price Factors and 2026 Rules
Tax on business insurance premiums in Canada: GST/HST, Ontario RST and Quebec
Why there is no GST/HST on business insurance, which provinces add their own tax to commercial premiums, how to read the tax line on a quote, and the arithmetic to check it.
Business insurance premiums in Canada are not subject to GST or HST, because insurance is an exempt financial service under federal sales tax law. Some provinces charge their own tax on many commercial premiums instead: Ontario applies its 8% retail sales tax (RST) to most property and casualty premiums other than auto, and Quebec charges its own tax on insurance premiums, generally 9%, rising to 9.975% (the QST rate) for premiums paid after December 31, 2026. A few other provinces tax certain lines, while most add nothing on the invoice. Separately, insurers pay provincial premium taxes that are already built into the price. When you compare quotes from different provinces or from insurers that present tax differently, always compare the total including tax.
This guide is part of the business liability insurance cost overview. Rates are stated as we understand them in October 2026; confirm the current rate with the provincial finance ministry or revenue agency before relying on it.
Two different taxes: one you see, one you do not
| Tax | Who pays it | Where it appears | Recoverable as an input tax credit? |
|---|---|---|---|
| Provincial sales tax or tax on insurance premiums (for example Ontario RST, Quebec tax on premiums) | You, the policyholder; the insurer or broker collects it | A separate line on the quote or invoice | No; it is not GST, HST or QST |
| Provincial premium tax paid by insurers | The insurer, on premiums it writes in the province | Built into the premium; not shown separately | Not applicable |
| GST/HST | Not charged on insurance premiums | Should not appear on the premium | Not applicable |
Because the premium is GST/HST-exempt, a business registered for GST/HST does not claim an input tax credit on insurance. The premium itself, and the provincial tax you pay on it, are normally part of your deductible business expense; see the Canada Revenue Agency's guidance on business expenses, and note that a premium paid for more than one fiscal year is generally deducted over the periods it covers.
Province by province: what to look for on the invoice
| Province | What to expect on a commercial liability quote | Where to confirm |
|---|---|---|
| Ontario | 8% RST added to most commercial property and liability premiums; auto insurance is exempt | Ontario Ministry of Finance |
| Quebec | Tax on insurance premiums, generally 9%, shown separately; 9.975% for premiums paid after December 31, 2026 | Revenu Québec |
| Manitoba, Saskatchewan, Newfoundland and Labrador | Provincial sales tax applies to certain insurance premiums; the lines covered and the rates differ | Each province's finance department |
| Other provinces and territories | Usually no tax line added for the policyholder; premium tax is built into the price | Provincial finance department, or ask your broker |
Rules on which coverage lines are taxed, and at what rate, change from time to time in provincial budgets. If a quote shows no tax in a province where you expect one, or a tax you do not expect, ask the broker which rule they applied. Taxes are one of several provincial differences; see provincial rules and Quebec differences for the others, and rules to check in 2026 for a renewal checklist.
Worked example: checking the tax line
An illustrative policy with a $2,500 premium before tax:
| Location of the risk | Tax rate | Tax | Total payable |
|---|---|---|---|
| Ontario | 8% | $2,500 x 0.08 = $200 | $2,700 |
| Quebec (premium paid in 2026) | 9% | $2,500 x 0.09 = $225 | $2,725 |
| Quebec (premium paid from January 1, 2027) | 9.975% | $2,500 x 0.09975 = $249.38 | $2,749.38 |
| A province with no tax line on the invoice | 0% | $0 | $2,500 |
To find the tax inside a total that already includes it, divide by (100 + rate) and multiply by the rate. For an Ontario total of $2,700: $2,700 x 8 / 108 = $200, leaving a $2,500 premium.
This matters when you compare quotes. If one broker shows an Ontario quote as $2,650 "plus applicable taxes" and another shows $2,790 "including RST", the first actually costs $2,650 x 1.08 = $2,862, which is $72 more. Put the tax-inclusive totals into the liability quote comparison tool.
Multi-province businesses
Tax generally follows where the insured risk is located, not where the head office is. A business with a store in Ottawa and another in Gatineau may see Ontario tax on the premium allocated to the Ottawa location and Quebec tax on the Gatineau share. Ask the broker to show:
- how the premium is allocated between provinces
- which tax applies to each share
- whether liability premiums for operations without a fixed location, such as travelling crews, are allocated by revenue or another method
Policy fees, broker fees and finance charges
Some quotes include a policy fee charged by the insurer, a broker fee for placing or servicing the policy, or both. Broker fees must be disclosed to you. Whether a separate fee attracts a provincial tax depends on the province and how the fee is charged, so ask for the tax treatment in writing. Finance charges on a premium finance plan are interest, not premium.
Buying from an insurer that is not licensed in Canada
Occasionally a business buys cover from an insurer that is not authorized in Canada, for example through an online platform abroad. Beyond the regulatory risk, the federal Excise Tax Act imposes a tax on premiums paid to unauthorized foreign insurers in many cases, and the buyer may have to self-assess and file it with the Canada Revenue Agency; provinces may have their own rules. Coverage placed through a licensed Canadian broker with an authorized insurer, including surplus lines placements where the province permits them, avoids most of these questions. Check with the CRA or an accountant before buying from an unlicensed insurer.
Frequently asked questions
Why is there no HST on my insurance but there is on my broker's other services?
Insurance and the arranging of insurance are generally treated as exempt financial services. Other services a broker or consultant provides, such as risk management consulting, may be taxable. Ask how each charge on the invoice is treated.
Can I claim the Ontario RST on my insurance back?
No. Ontario RST on insurance is a separate provincial tax, not part of the HST, and there is no input tax credit for it.
Do I pay tax on the premium refund if I cancel?
When premium is refunded, the corresponding tax is normally refunded in proportion. See cancelling a policy mid-term.
Does tax apply to the premium audit adjustment?
Yes, an additional premium after an audit normally carries the same tax treatment as the original premium, and a return of premium carries a proportional tax refund.
Sources
- Canada Revenue Agency — GST/HST treatment of financial services, business expenses and excise tax on insurance premiums
- Ontario Ministry of Finance — retail sales tax on insurance premiums
- Revenu Québec — tax on insurance premiums in Quebec
- Insurance Bureau of Canada — general information on insurance costs
