Self-Employed Tax Guide for Ontario
Ontario uses a single Harmonized Sales Tax (HST) at 13%, making tax recovery straightforward — every dollar of HST you pay on business purchases is fully recoverable through Input Tax Credits.
Ontario Tax Structure
How your business purchases are taxed at the register.
Ontario operates under the Harmonized Sales Tax (HST), which combines the federal 5% GST with a provincial 8% component into a single 13% tax. For self-employed workers, this is the simplest system to manage — one tax rate, one line on your invoices, and one Input Tax Credit claim.
Because HST is fully harmonized, every cent of the 13% you pay on legitimate business expenses is recoverable when you file your GST/HST return. There is no split between recoverable and non-recoverable portions, unlike provinces with separate PST. Ontario adopted HST on July 1, 2010, replacing the old 8% PST + 5% GST system.
Ontario is home to the largest population of self-employed Canadians, with over 1.1 million sole proprietors. The province's diverse economy means ScanForTax processes everything from Bay Street IT consulting receipts to Muskoka construction invoices — all at the same 13% HST rate.
Tax Calculation Examples
See exactly how taxes break down on common business purchases in Ontario.
$500 Office Supplies at Staples
Ontario
You pay $565 at the register. The full $65 HST is recoverable as an ITC on your next GST/HST return, making your true cost only $500.
$1,200 Laptop for Business
Ontario
The laptop costs $1,356 with tax. You recover $156 via ITC, and the $1,200 net cost is eligible for CCA Class 50 (55% depreciation rate).
$80 Business Lunch (2 people)
Ontario
Meals are 50% deductible on T2125, but the HST ITC is calculated on the full tax amount. You recover the full $10.40 in HST and deduct 50% of the $80 subtotal as a business expense.
How to Recover Tax in Ontario
Your Input Tax Credit (ITC) filing roadmap.
Collect
Keep receipts with GST/HST registration numbers
Categorize
Match each expense to a T2125 line item
File & Recover
Claim ITCs on your GST/HST return
In Ontario, all HST paid on business expenses is recoverable through Input Tax Credits (ITCs). File your GST/HST return (quarterly or annually) and list total ITCs claimed. For invoices under $30, simplified documentation is accepted. For $30–$99, the supplier's GST/HST registration number is required. For $100–$499, full details including date and total are needed. For $500+, the supplier must also include your name or business name. Common claimable categories include office expenses, motor vehicle expenses, and telephone and utilities. ScanForTax automatically extracts HST amounts and validates invoice tier requirements.
Ontario-Specific Tax Rules
3 advantages, 1 things to watch
Full ITC Recovery on All Business Purchases
AdvantageUnlike BC or Saskatchewan where PST is a sunk cost, Ontario's HST is 100% recoverable. A $10,000 equipment purchase means $1,300 back in your pocket through ITCs.
Ontario Trillium Benefit Does Not Affect Business ITCs
AdvantageThe Ontario Trillium Benefit (OTB) is a personal credit — it does not reduce or interact with your business ITCs. You can claim both independently.
Point-of-Sale PST Exemptions No Longer Apply
Heads upBefore HST (pre-2010), Ontario exempted PST on certain items like children's clothing and books. Under HST, the full 13% applies to almost everything. Rebates exist for some items like new homes but not for typical business purchases.
Large Business ITC Restrictions Have Been Phased Out
AdvantageOntario previously restricted ITCs on certain expenses (energy, telecom, meals, vehicle fuel) for large businesses. These restrictions were fully phased out by July 2018 and do not affect small businesses or sole proprietors.
Ontario RITC rules (expired 2018)Popular Professions in Ontario
See profession-specific tax guides for self-employed workers in Ontario.
Provincial Resources
Official government and support links for Ontario self-employed workers.
CRA GST/HST for Businesses
canada.caFederal guide to GST/HST registration, collection, and filing.
Ontario Ministry of Finance — Tax Information
ontario.caProvincial tax information and small business programs.
CRA T2125 Guide — Business Income
canada.caOfficial CRA guide for reporting self-employment income and expenses.
Frequently Asked Questions
What is Ontario's HST rate for self-employed workers?
Do I need to register for HST in Ontario?
How often do I file my HST return in Ontario?
Can I claim ITCs on vehicle expenses in Ontario?
What records do I need to support HST ITCs?
Is HST charged on professional services in Ontario?
Key Expense Categories
Common T2125 deductions for Ontario self-employed workers.
Related Province Guides
Tax deadline is April 30th.
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