In the past, Health Spending Account claims were exempt from taxes. Most provincial governments still do not tax Health Spending Account Claims but Ontario applies unique provincial taxes to the HSA product.
Ontario PST, RST, HST and Health Spending Accounts
The Ontario government has its own unique tax treatment of "insurance premiums" and Health Spending Accounts. There is a 2% special Premium tax and 8% RST on the claimed amount. A 13% HST is also charged on the administration fee amount.
Example of a $1,000 claim in Ontario
1. HSA Deluxe / Plus / Basic
Premium tax: 2% or $20
RST: 8% or $80
No HST as there is no administration fee
2. HSA Group
[A] Claim: $1,000
[B] Olympia 8% administration fee: $80
[C] Subtotal: $1,080
[D] 2% Premium Tax on [C:] $21.60
[E] 13% HST on [B]: $10.40
[F] 8% RST on [A]: $80
[F] A+B+D+E = F = $1,192.00
BC, Alberta, Saskatchewan and Manitoba do not have the additional taxes on claims.