ERP and accounting software for Ontario: 13% HST, EHT, WSIB

Ontario compliance in one view

An Ontario business charges 13% HST on taxable supplies made in Ontario, files a single GST/HST return with the CRA, pays Employer Health Tax once its Ontario payroll passes the exemption, and pays WSIB premiums for its workers. It matters because Ontario concentrates most obligations with the CRA, so the ledger feeds fewer agencies than in Quebec or British Columbia, but each payroll levy has its own calendar.

Ontario is one of five participating provinces in the harmonized sales tax. There is no separate provincial sales tax return and no provincial sales tax registration: HST registration with the CRA covers both the federal and Ontario parts. Payroll deductions, including Ontario personal income tax, go to the CRA on the employer's normal remittance schedule. The Ontario Ministry of Finance administers the Employer Health Tax, and the Workplace Safety and Insurance Board runs workplace insurance.

For the national system of thirteen jurisdictions, the T2 and T4 calendar and the IFRS or ASPE choice, see our Canada page. This page covers what is specific to Ontario.

• Sales tax: 13% HST, administered by the CRA
• Payroll levies: Employer Health Tax (Ministry of Finance) and WSIB premiums
• Corporate filings: T2 with the CRA; annual return in the Ontario Business Registry
• Audit exemption: available to non-offering corporations with every shareholder's written consent

HST at 13%: one tax, one return

Harmonization means the ledger has one output tax, one input tax and one return. A Toronto supplier invoicing 10,000 dollars of taxable consulting to an Ottawa client charges 1,300 dollars of HST, 11,300 dollars in total, and the invoice shows 13% HST as one line. If the supplier bought 4,000 dollars of taxable equipment in the same period, it paid 520 dollars of HST and claims that back as an input tax credit. Net tax for the period is 1,300 minus 520, 780 dollars.

The CRA's presentation rule is specific: where HST applies, show the total HST rate and do not show the federal and provincial parts separately. The customer must also be able to see whether tax is included in the price or added to it. For invoices of 500 dollars or more to registered customers, the invoice needs the buyer's name, a description of the supply and the payment terms, as well as the supplier's registration number, or the customer's input tax credit can be denied.

Because Ontario's provincial component is part of the HST, it is fully recoverable by registrants, which is the practical difference from a retail PST. An Ontario manufacturer recovers the whole 13% paid on machinery; the same manufacturer's British Columbia branch pays 7% BC PST on its own equipment as a cost.

• Output HST on 10,000 dollars of sales: 1,300
• Input tax credits on 4,000 dollars of purchases: 520
• Net HST payable for the period: 780
• Invoice shows 13% HST as one rate

Selling from Ontario into other provinces

The HST rate is set by the place of supply, so an Ontario head office does not make every sale 13%. The CRA's own example is a Vancouver furniture store that delivers a mattress to Toronto and charges 13% HST because the place of supply is Ontario; the rule works the same way in reverse. A Mississauga distributor that ships to Calgary charges 5% GST, to Halifax 14% HST, and to Moncton or St. John's 15% HST, and reports all of it on the same CRA return.

Provincial sales taxes outside the HST are a separate question. British Columbia requires sellers located outside the province to register and collect BC PST when they make sales to BC customers, and Quebec sales carry QST. An Ontario business that ships across the country therefore needs its invoicing to determine tax from the delivery address, and its ledger to hold each tax on its own account so that the CRA return and any provincial return can each be prepared without re-sorting invoices by hand.

Employer Health Tax: rates, exemption and a worked example

The Employer Health Tax is a payroll tax on remuneration, including salaries, wages, bonuses, taxable benefits and stock option benefits, paid to employees who report for work at, or are paid from, a permanent establishment in Ontario. The rate depends on total Ontario remuneration before any exemption: 0.98% on payrolls up to 200,000 dollars, rising in steps to 1.95% on payrolls over 400,000 dollars.

Eligible employers deduct an exemption of 1 million dollars, set during 2020 and made permanent in 2021, and scheduled for inflation adjustment on 1 January 2029. To claim it, the employer must be eligible under the Employer Health Tax Act, must pay income tax, must not be controlled by a level of government, and must have Ontario payroll, including that of associated employers, under 5 million dollars, unless it is a registered charity. Associated employers share one exemption and must file an allocation agreement; if the form is missing, the whole group loses the exemption.

The Ministry of Finance's own example: an eligible employer with 1,800,000 dollars of Ontario payroll claims the exemption on the first 1,000,000 dollars and pays tax on the remaining 800,000 dollars. Because payroll before the exemption exceeds 400,000 dollars, the rate is 1.95%, so the tax is 800,000 x 1.95% = 15,600 dollars. That employer's payroll is above 1.2 million dollars, so it pays monthly instalments and files the annual return by 15 March of the following year.

• Up to 200,000 dollars of Ontario payroll: 0.98%
• 200,000.01 to 400,000 dollars: stepped rates from 1.101% to 1.829%
• Over 400,000 dollars: 1.95%
• Exemption: 1 million dollars for eligible employers under 5 million dollars of payroll
• Monthly instalments: payroll over 1.2 million dollars
• Annual return and balance: by 15 March

WSIB: workplace insurance premiums

The Workplace Safety and Insurance Board provides workplace injury and illness insurance for most Ontario employers, paid for through employer premiums. Each business is classified under the WSIB's Employer Classification Manual and pays a premium rate per 100 dollars of insurable earnings for its class. Coverage is mandatory in the construction industry.

For 2026 the WSIB lowered the average premium rate to 1.23 dollars per 100 dollars of insurable payroll, which it describes as the lowest in more than 50 years. Individual rates are published only through the WSIB's online services. As an illustration only, a business with 500,000 dollars of insurable earnings at exactly the average rate would pay 500,000 / 100 x 1.23 = 6,150 dollars for the year; a construction or manufacturing class will differ.

Two operational deadlines matter to finance teams. Changes to the business must be reported to the WSIB within 10 calendar days, and a workplace injury or illness must be reported within three business days of learning of it. Contractors are frequently asked for a WSIB clearance certificate before they are paid, so accounts payable teams often hold a supplier's clearance status alongside its tax number.

Corporate filings, audit exemption and records

Ontario corporation income tax is computed on the federal T2 return and filed with the CRA, which uses the federal business number. The Ontario corporation number, issued by the Ontario Ministry of Public and Business Service Delivery, is used for the annual return under the Corporations Information Act. From May 2021 the CRA stopped accepting these annual returns on Ontario's behalf, and returns due after 18 October 2021 are filed directly in the Ontario Business Registry.

Under section 148 of Ontario's Business Corporations Act, a corporation is exempt from the requirement to appoint an auditor for a financial year if it is not an offering corporation and all of its shareholders consent in writing to the exemption for that year. The consent is year by year, so a company that relies on it needs a fresh consent each year and, in practice, a lender's agreement if its loan covenants call for a review engagement or audit. Directors of a non-offering corporation still place financial statements before each annual meeting.

Ontario businesses keep records for the CRA's six-year period from the end of the last tax year they relate to, in Canada unless the CRA permits otherwise. The EHT and WSIB each audit payroll, so the payroll register should reconcile to the general ledger, the T4 summary, the EHT return and the WSIB reported earnings without adjustment.

Cities and regions: where the rules differ

HST, EHT and WSIB apply identically across the province, so a business in Toronto, Ottawa, Mississauga, Brampton, Hamilton, London, Markham, Vaughan, Kitchener or Windsor charges the same 13% and pays the same payroll levies. Commercial property taxes and business licensing are municipal, but no Ontario city adds its own sales tax to ordinary goods and services.

Accommodation is the exception. Ontario municipalities can levy a municipal accommodation tax on short stays. The City of Toronto charged a temporary 8.5% rate until the end of July 2026; from 1 August 2026 its municipal accommodation tax is back to 6% on transient accommodation, in addition to HST. A hotel group operating in several Ontario cities therefore needs a separately configured accommodation tax per municipality and must change the Toronto rate by stay date.

Ottawa is the other special case. Many Ottawa employers have staff who live in Gatineau, Quebec. Payroll follows the establishment the employee reports to, so a Gatineau resident who reports to an Ottawa office is on Ontario rules with CPP and full-rate EI, while a colleague who reports to the firm's Gatineau office is on QPP, QPIP and Revenu Québec remittances.

How Skyline Nexus ERP handles Ontario requirements

Skyline Nexus ERP is a cloud ERP with a double-entry general ledger under Fiscal Authority. A 13% HST rate is set up as a single tax rate, and other provinces' rates, such as 5% GST or 15% HST, as rates of their own, chosen on each sale line; separate taxes such as GST and BC PST can be combined in a tax group of sub-taxes. When the auto-post switches are on, final sales, purchases, payments and expenses post balanced journals in the background, with output tax computed per line on the same basis as the tax report, and the VAT Return screen prefills tax-exclusive sales and purchase bases and tax for a date range and location, ready to transfer to the CRA return.

Each Ontario branch can be a business location with its own invoice numbering scheme, stock and user access, and the trial balance, profit and loss and balance sheet can be filtered by location. Expense categories map to their own GL expense accounts, so EHT and WSIB premiums can be tracked on dedicated accounts, and cost centres and budgets let a finance team compare payroll levies against plan. Fiscal years start in any month, periods can be locked once the HST return is filed, and the Audit Pack exports a year of ledger reports to one Excel workbook for the reviewer or auditor.

Two points to plan for. Canadian payroll, including CRA source deductions, T4 slips, Records of Employment, EHT calculation and WSIB reporting, is part of the Canadian roll-out rather than live today; until your go-live, run payroll in a Canadian payroll service and post its journal to the ledger. And tax rates carry no effective-date history, so a rate change such as Toronto's accommodation tax moving from 8.5% to 6% is handled by creating the new rate and switching to it on the day.

Rates, regimes and deadlines in this summary change, and many countries are actively legislating on e-invoicing. This is general information, not tax or legal advice — confirm the current position with the authority named above or with your tax adviser before you rely on it.