At a glance
- Enhanced provincial HST rebate for new homes up to $80,000.
- Combined GST/HST relief may reach $130,000 for eligible purchases.
- Updated first-time home buyer rebate timing aligned with federal rules.
- New IPT election allows deferral for funded benefit plans.
- Simplified alcohol tax framework with administrative relief measures.
Ontario’s 2026 Budget delivers a series of targeted indirect tax measures, with a clear focus on housing affordability and cash flow relief. Below is an overview of the key developments and practical considerations for taxpayers.
Enhanced Ontario HST relief on new homes
Currently, purchasers of new homes in Ontario can qualify for a rebate of 75% of the provincial portion of the 8% HST, capped at $24,000. Ontario proposes to temporarily enhance this relief by allowing a rebate of the full 8% provincial HST component for purchase agreements entered into between April 1, 2026, and March 31, 2027.
The provincial rebate would be capped at $80,000 for homes with a value up to $1.5 million. The rebate would be phased out on a linear basis for homes valued between $1.5 million and $1.85 million, after which the relief returns to a maximum of $24,000.
When combined with existing federal rebates, purchasers may receive total relief of up to $130,000 for homes valued up to $1M.
Combined GST/HST relief by home value
| Home price | Combined GST/HST Relief |
|---|---|
| Up to $1,000,000 | 13% |
| Between $1,000,000 - $1,500,000 | Capped at $130,000 |
| $1,500,000 - $1,850,000 | Reducing from $130,000 to $24,000 |
| More than $1,850,000 | Capped at $24,000 |
Ontario First Time Home Buyer’s rebate
Ontario will align the effective date of the provincial first-time home buyers’ rebate with the federal program by moving it from May 27, 2025, to March 20, 2025. The program is available for qualifying individuals that enter into a purchase agreement for the home on or after March 20, 2025, and before 2031 for a home intended as their primary residence. Construction of the home must begin before 2031 and the home must be substantially completed before 2036.
Ontario Insurance Premium Tax (IPT) election for funded benefit plans
Effective April 1, 2026, funded benefit plans may elect to be treated similarly to unfunded benefit plans for Ontario IPT purposes.
Under the current rules, funded benefit plans are generally subject to IPT when taxable contributions are paid into the plan, resulting in an upfront tax cost. In contrast, unfunded benefit plans are typically subject to IPT only as benefits are paid. Administration fees related to the plan are also subject to IPT. This new election allows planholders of funded benefit plans to defer payment of the IPT until benefits are paid from the plan, rather than when the premiums are received.
Plan sponsors and administrators should look at their current processes related to the calculation and remittance of IPT and evaluate potential benefits.
Simplified alcohol taxing framework
Ontario is proposing to simplify alcohol taxation by consolidating multiple legacy beer, wine, and spirits taxes into single, streamlined rates. The changes also include targeted relief, particularly for small beer manufacturers and Ontario wine producers. These measures are expected to take effect April 1, 2026, and are intended to reduce administrative complexity and align with the LCBO’s updated wholesale pricing framework. A temporary filing relief period to August 20, 2026, provides affected producers and retailers additional time to adapt to the new rules without penalties.
How BDO can help
These indirect tax changes may affect housing transactions, employee benefit structures, and compliance obligations across several industries. Understanding how these measures apply to your organization is key to identifying potential opportunities and managing risk. If you would like to discuss how these changes may impact your business, please contact a member of our tax team.
The information in this publication is current as of March 26, 2026.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.