The customer is the vehicle owner, whoever writes the cheque
For HST purposes a collision repair is supplied to the person whose car is in the shop, not to the insurer funding the claim. The invoice names the vehicle owner, quotes the claim number for the adjuster's convenience, and charges 13% HST on everything that makes up the repair: body and refinish labour, parts, the materials formula, sublet glass and calibration work, every fee line on the estimate. The insurer's cheque is an indemnity that settles the owner's bill. It does not change what was sold, who bought it, or how much tax rides on it.
That one fact settles most of the arguments shops have at the counter. The deductible is not a separate charge and not a tax-free one; it is the first slice of the same taxable price, paid by the owner instead of the insurer. A supplement approved at teardown joins the same supply and carries the same 13% when the final invoice goes out. A goodwill touch-up done for nothing is billed to no one, so no HST arises on it at all.
Commercial claims arrive net of HST, and the counter has to know
When the insured is an HST registrant, a contractor's pickup, a courier van, most fleet and many leased units, the insurer settles the claim net of HST, because the registrant recovers the tax through its own input tax credits. The shop must still collect the full 13%, now from the customer at delivery, on top of the deductible. A counter that treats every file like a private-passenger claim hands those cars back with the tax uncollected, then spends weeks invoicing a fleet office for money the shop already owes on its next return.
| Whose vehicle | What the insurer pays | Collect at delivery |
|---|---|---|
| Private passenger, consumer owner | The repair including HST, less the deductible | The deductible only |
| Business vehicle, owner is an HST registrant | The repair net of HST, less the deductible | The deductible plus the full 13% |
| Leased or fleet-managed vehicle | Depends on the lessor's registration status | Confirmed with the adjuster before the car is promised |
Delivery day is a tax event
Collecting the deductible at delivery is more than a cash habit. Ontario's Repair and Storage Liens Act gives the shop possession until the bill is paid, and delivery is the last moment that leverage exists. The deductible gets receipted against the repair order as a payment on the taxable repair, never booked as other income, and never taxed twice; the 13% was computed once, on the full invoice.
Two delivery-day errors show up in almost every clean-up we take on: HST charged again on the deductible as though it were a separate fee, and a registrant-owned vehicle released with only the deductible collected. Both are cheap to prevent with a delivery checklist and expensive to fix inside a filed period. On a total-loss file there is no delivery at all; teardown time, the estimate fee and storage get billed to the insurer, and each is a taxable supply at 13% just as the repair would have been.
You remit on your invoice date; insurers pay on theirs
HST becomes collectible when the invoice is issued, not when the cheque clears. A quarterly filer can therefore owe the CRA the tax on a January repair before the insurer's payment for it arrives, and the receivable lag described on our body shop accounting page turns into a tax-cash problem, not just a bookkeeping one. We manage it three ways: returns built from repair-order records rather than bank deposits, a remittance reserve funded as settlements land, and short-pays papered with credit notes so the tax follows the price the insurer actually settled instead of a number it later walked back.
The T2 runs on the same accrual clock. Insurer receivables are income in the year the work was billed, unapproved supplements sit in work in process rather than revenue, and CRA's systems compare the T2 revenue line against the year's HST returns, which means both filings have to come from one set of records with the reconciliation kept in the file. Our Corporate Tax Filing service prepares the T2 and the HST returns together, and if a query arrives anyway, CRA Audit & Review Support answers it with the working papers already assembled. Instalments, equipment timing and the owner's own pay get decided in advance on our tax planning page. Fees come as a written quote after a free 15-minute discovery call, for collision shops across Mississauga and the GTA.
