Thirteen percent on the hook, the winch and the gate
Nothing a tow truck bills is exempt. The base tow, winching and recovery time, dollies, the after-hours premium, admin and gate fees and every day of compound storage all carry 13% HST in Ontario. There is no small-supplier comfort to plan around either: one working truck passes the $30,000 registration threshold in short order, so we treat registration as a day-one fact and build the invoice templates so every charge line carries its tax from the first call.
The other half of the return is what flows back. Diesel, tires, truck repairs, lease payments on the wrecker, yard rent and dispatch software all carry 13% you recover as input tax credits, provided the paper survives. The itemized invoices Ontario's certificate regime requires have made the revenue side of towing HST unusually clean; we hold the cost side to the same standard, because the return is only as strong as the fuel receipts behind it.
The invoice starts the HST clock, not the cheque
HST generally becomes collectible when the invoice is issued, not when it is paid. On a cash call the distinction is invisible. On an accident tow invoiced at release and sent to an insurer, it means the 13% lands in the current HST return while the money arrives weeks or months later, after an adjuster has been through every line. A towing company with real insurer volume is permanently remitting ahead of collection, and the filing has to respect that without ever guessing.
What keeps the position honest is the correction machinery the law actually provides, used deliberately instead of quiet under-reporting:
| What happened to the invoice | What the HST return does |
|---|---|
| Paid in full | Nothing further; the tax was remitted when billed |
| Adjuster settles for less | We issue a credit note and the net tax adjusts in the period of the credit |
| Account written off as uncollectible | The HST already remitted comes back as a bad-debt adjustment on that period's return |
| Lien sale recovers part of the balance | The documented shortfall is written off and its HST recovered the same way |
Each of those entries needs paper behind it: the credit note itself, the write-off in the books, the sale record. The bad-debt claim also runs on a four-year window, which is one more reason towing books cannot wait for tax season to be looked at.
A T2 shaped by trucks and a yard
The corporate return runs on the same call-level data. Active towing income is taxed at roughly 12.2% combined on the first $500,000 for an Ontario CCPC, and the largest deduction on most towing T2s is capital cost allowance on the fleet, where the wrecker-versus-flatbed classification deserves a considered answer rather than a default. The timing choices behind those claims belong to Tax Planning & Advisory, not to filing week.
Storage is the towing-specific wrinkle on the income side: taxable income follows what the yard earned through the year-end, not just what was invoiced, and where collection has become doubtful the return can carry a reserve so you are not taxed on optimism. Corporate Tax Filing means the T2 reconciles to dispatch records, club settlements and the storage ledger, filed on the corporate deadlines with instalments calendared, so the only surprises left in the year are the ones on the highway.
Drivers on payroll, the owner across the desk
Percentage pay does not change what a driver is. Someone driving your truck, on your insurance, under your dispatch, is almost always an employee, and paying them gross as a contractor invites a CPP and EI reassessment with the employer's share, interest and penalties attached. T4s go out by the end of February, and where the company pays for or reimburses a driver's certificate under the provincial regime, that cost is simply a deductible cost of keeping the truck legal.
The owner's personal return is the other filing that has to agree with the corporate one. Salary, dividends and any shareholder loan movements land on the T1 in a way that matches the T2, which is why we prepare them together through Personal Tax Filing. We do this work for tow operators across Mississauga and the GTA, quoted in writing after a free 15-minute discovery call, and if a CRA letter about any of it lands in between, it comes to us first.
