Can I threaten to report someone to police in a demand letter to get them to pay me in Ontario?

This is a legally risky approach and you should get legal advice before doing it. In Ontario, and under the Criminal Code of Canada, threatening to report a person to authorities as leverage to extract money can constitute extortion — a serious criminal offence — even when you genuinely believe the other party committed a crime.

The line between a lawful demand and extortion can be fine. It is generally permissible to inform someone that you intend to report a criminal matter to police independently of any civil claim. It is very different — and potentially criminal — to say something like "pay me by Friday or I will report you to police." The explicit linkage of payment to silence on a criminal matter is what makes it problematic.

If you believe a crime was committed against you (for example, fraud or theft), you can report it to police separately from pursuing a civil claim. You can also simultaneously pursue civil remedies for your losses. A lawyer can help you draft a demand letter that asserts your civil claim firmly without crossing into criminal territory. When in doubt, keep your civil demand and any criminal reporting entirely separate.