Harmonized Sales Tax (HST)
On July 1, 2010, the Ontario Retail Sales Tax (RST) was replaced by the Harmonized Sales Tax (HST). The provincial portion of the HST is 8% and the federal portion is 5%, for a combined HST rate of 13%.
The Canada Revenue Agency administers the HST.
Like other businesses, farm businesses, with a HST registration must charge, collect, and remit HST on sales of taxable goods and services. HST registrants must also file HST returns on a regular basis. Some goods and services are exempt from HST, others are zero-rated, i.e., taxable at a rate of zero.
The Canada Revenue Agency has a questionnaire to help businesses determine if they must or should register for HST.
Ontario Retail Sales Tax (RST)
Although the Ontario government harmonized the provincial sales taxes with the federal goods and services taxes in most cases, the Ontario Retail Sales Tax continues to apply to:
- Taxable insurance premiums and
- Private sales of specified vehicles from a person who is not a GST/HST registrant
Insurance premiums on livestock and agricultural property are conditionally-exempt from Ontario Retail Sales Tax when the purchaser is entitled to an exemption and provides a valid Purchase Exemption Certificate or a valid identity card such as the OFA Membership Card.
The following insurance premiums are conditionally exempt from Ontario Retail Sales Tax:
- Contracts of insurance on agricultural property include farm buildings, structures, equipment, and livestock normally located on the farm. To qualify for the exemption from RST, the property must be owned or leased to a person actively engaged in the business of farming and the property must be located on the farm as farm property.
- Contracts of insurance for all-terrain vehicles used by farmers for agricultural use.
- Contracts of insurance for bloodstock or livestock purchased by a person engaged in the business of farming, to insure livestock against loss through death, sickness, accident or theft of the animal.
An Application for Refund of Retail Sales Tax (RST) on Insurance or Benefit Plan Premiums paid within the last four years can be submitted to Ontario Ministry of Finance.
Diesel Fuel Tax
Diesel fuel used in on-road, plated vehicles is subject to three taxes:
- Federal Excise tax (4.0 cents per litre)
- Provincial Fuel tax (9.0 cents per litre until December 31, 2024)
- HST at 13 percent
The Provincial Fuel tax and the Federal Excise tax are fixed-rate taxes. They do not vary with the price of diesel, while HST is calculated based on the price of the diesel.
In Ontario, farmers are permitted to purchase and use “coloured diesel” in their unplated farm equipment. Coloured diesel is exempt from the 9.0 cents per litre Provincial Fuel tax (temporarily reduced from 14.3 cents per litre). Farmers are also eligible for a rebate of HST paid on fuel used to operate unplated farm equipment. The 4 cents per litre of Federal Excise Tax is applied to all diesel fuel, on-road and off-road.
The potential savings of coloured diesel are best illustrated with an example:
Diesel Fuel Prices & Taxes
Unplated farm equipment |
On-road use in plated vehicles | |
| Assumed pre-tax price of diesel | 150 cents/litre | 150 cents/litre |
| Provincial Fuel tax | – | 9 cents/litre |
| Federal Excise tax | 4 cents/litre | 4 cents/litre |
| Subtotal | 154 cents/litre | 163 cents/litre |
| Add 13% HST | 20.02 cents/litre | 21.19 cents/litre |
| Subtract HST rebate | 20.02 cents/litre | – |
| NET TOTAL | 154 cents/litre | 184.19 cents/litre |
Additional Information:
- For additional information on taxable, exempt and zero-rated goods visit CRA’s website
- Excise fuel tax