E&O Insurance >FAQS>LAWYERS in Private Practice FAQs
LAWYERS in Private Practice FAQs
If you have questions that are not answered below, or if you need further clarification or information, please contact
LAWPRO®'s Customer Service department toll-free at 1-800-410-1013, 416-598-5899 in Toronto
or at [email protected].
Please note that, as an insurance company, LAWPRO does not provide tax advice. The answers provided below represent our understanding of the application of the various tax laws. However, we encourage you to consult your tax adviser about the application of these tax laws.
The Harmonized Sales Tax (HST) formally came into effect in Ontario on July 1, 2010. Note that some transitional rules were
enacted and some of them took effect before the July 1, 2010, implementation date. The Ontario Ministry of Revenue published
an Information Notice to help businesses and individuals with these special rules.
Download PDF file.
As a general rule, both goods and services are subject to the 13 per cent HST. However, the legislation contains many
exceptions to the general rule. The Ministry of Revenue has published a guide below to help businesses and individuals
appreciate the differences.
Download PDF file.
No. Although the provincial sales tax for many goods and services has, in effect, been rolled into the HST, the Ministry of
Revenue has retained the PST on some items, such as an eight per cent provincial sales tax on insurance premiums.
Policies effective on or after July 1, 2010, do not attract the HST. Premiums for your professional liability insurance
under the Law Society of Upper Canada's mandatory program and your firm's LAWPRO Excess policy continue to attract only the
eight per cent PST.
No. Whether or not you have paid your premiums in full or not is irrelevant, as insurance premiums will continue to attract only the eight per cent PST which you have already paid if you have paid your premiums in full.
If you disburse the amount of the transaction levy surcharge to a client, subject to the Ministry of Revenue's transitional
rules, this amount no longer attracts the five per cent GST, but after July 1, 2010, is subject to the 13 per cent HST (which is remitted directly to the government).
The HST applies to many defence and investigative costs, such as legal fees, fees for expert witnesses and other services.
However, the maximum amount that you are obligated to pay in relation to your deductible or that LAWPRO is obligated to pay
under the policy remains unchanged.
As at December 31, 2009, LAWPRO accrued an additional $10.7 million in loss reserves to cover the expected impact of the HST on claims already reported that remain open after July 1, 2010. In other words, the additional cost to the insurance program to cover HST that will apply to many defence and investigative costs on claims not yet resolved is close to $11 million. In addition, going forward, we expect the HST to add about $3 million annually to claims costs reported under each new policy year.