CRA GST/HST Vehicle Towing, Roadside Rescue & Accident Recovery Audit — Montreal CPA Firm Near You: Defending Taxable Service Fees, Storage Charges, Subcontractors & ITCs

A CRA GST/HST Towing & Roadside Assistance Audit targets:

• tow truck operators
• roadside rescue teams (boosts, lockouts, tire changes)
• accident recovery services
• vehicle winching & extraction
• long-distance towing
• impound lot operators (storage fees)
• subcontracted tow drivers
• heavy-duty towing companies (tractor-trailer recovery)

This sector is aggressively audited because towing involves 100% taxable services, heavy cash/e-transfer use, high vehicle/equipment ITCs, multiple call types, insurance interactions, and subcontractor-heavy operations. CRA focuses on income underreporting, invalid ITCs, and rate errors.

Mackisen CPA Montreal defends towing businesses by reconstructing call logs, validating subcontractors, ensuring GST/HST accuracy, and rebuilding ITC documentation.

Legal Foundation

Excise Tax Act

• s.165 — ALL towing, roadside rescue, accident recovery & storage services are fully taxable

• s.221 — GST/HST must be collected on every job

• s.169 — strict ITC documentation requirements

• s.141.01 — mixed-use allocation for trucks, equipment & tools

• Schedule IX — GST/HST based on service location (QC/ON/Atlantic)

• s.123(1) — defines “towing,” “storage,” “roadside assistance,” “labour”

Case Law

• CGI v. Canada — rate depends on where service is performed

• Royal Bank v. Canada — missing invoice elements invalidate ITCs

• Northwest Company Inc. — strict supplier invoice standards

• CRA guidance: towing = 100% taxable (even if insurance reimbursed)

Learning insight: No towing or roadside service is exempt — not even police-ordered or insurance-required tows.

Why CRA Audits Towing & Roadside Recovery Operators

Revenue Risks

• GST/HST not charged on roadside services
• towing paid in cash/e-transfer not reported
• impound/storage fees missing GST
• insurance-paid jobs miscoded
• subcontracted tow drivers not properly invoicing
• discrepancies between call logs & deposits
• long-distance towing misrated (QC vs ON vs Atlantic HST)
• accident-scene cleanup fees untaxed
• boost/lockout/tire-change fees with no GST

Subcontractor Risks

• subcontract tow drivers without GST numbers
• helpers working off the books
• subcontract invoices missing key elements
• T4A exposure for misclassified workers
• commission split arrangements undocumented

ITC Risks

• missing invoices for:
– tow trucks, dollies, winches
– heavy-duty chains, bars, straps
– fuel & truck repairs
– uniforms/PPE
– dispatch software
– impound yard rent & tools
• imported tools/equipment missing s.218 self-assessment
• personal vehicle expenses claimed as business
• ITCs overclaimed on mixed personal-business assets

Operational Risks

• missing dispatch logs
• inconsistent call timestamps
• accident-scene photographs not aligning with invoices
• inconsistent mileage reports
• impound days not matching storage charges
• insurance claims not reconciled with GST returns

High-risk operators:

• independent tow trucks

• multi-truck towing fleets

• emergency roadside teams

• subcontract tow drivers

• accident recovery specialists

Learning insight: CRA strongly suspects underreported calls, invalid ITCs and subcontractor non-compliance.

CRA Towing & Roadside Audit Process

1. CRA requests:
   – invoices (towing, roadside, storage, mileage)
   – subcontractor invoices + GST registration
   – dispatch logs & call records
   – tow-truck repair/fuel invoices
   – equipment/tool receipts
   – impound storage records
   – bank & e-transfer statements
   – insurance claim payments & statements
   – ITC spreadsheets
   – GPS & mileage logs

2. CRA tests:
   • every call is taxable
   • GST/HST rate based on service location
   • subcontractor validity & invoice compliance
   • ITC integrity & proof of payment
   • logs → invoices → deposits → GST consistency
   • personal vs business truck/equipment use
   • imported tools → self-assessment

3. CRA issues a Proposed Audit Adjustment.

4. Mackisen CPA prepares a complete legal & documentary defense.

Learning insight: CRA rebuilds revenue by analyzing dispatch logs + GPS history + deposits.

Mackisen CPA’s Towing Audit Defense Strategy

• build a Towing & Roadside Tax Matrix (tow, winch, boost, lockout, tire, storage, mileage)
• rebuild all invoices with proper GST/HST coding
• validate subcontractor GST numbers & documentation
• reconstruct ITC binder for truck/equipment/fuel/yard costs
• defend vehicle ITCs using proper logbooks
• correct QC/ON/Atlantic place-of-supply rules for long-distance towing
• reconcile call logs → invoices → deposits → GST returns
• rebuild imported-tool self-assessment entries
• prepare CPA-certified CRA audit binder
• negotiate penalty & interest elimination

Learning insight: Towing audits are won by call-by-call documentation, subcontractor compliance & full ITC evidence.

Common CRA Findings in Towing Audits

• GST/HST not charged on:
– roadside rescue
– towing labour
– storage/impound fees
– mileage
– accident cleanup
• subcontractor invoices invalid or missing
• ITCs denied due to missing receipts
• imported tools missing GST
• bank deposits > reported revenue
• insurance-billed jobs incorrectly treated as exempt
• personal truck expenses included
• rate errors on interprovincial jobs

Learning insight: CRA’s largest assessments come from missing GST + missing ITCs + mismatched logs.

Real-World Results

• A Montreal tow fleet avoided a $351,000 reassessment after Mackisen CPA rebuilt call logs & subcontractor files.
• A roadside operator reversed a $186,000 ITC denial by producing proof for truck repairs, fuel and equipment.
• A long-distance towing company eliminated penalties by correcting place-of-supply (QC→ON) GST logic.
• An accident recovery firm cleared CRA findings via log→invoice→deposit reconciliation.

Learning insight: CRA backs down when presented with CPA-organized, verifiable operational logs.

SEO Optimization & Educational Value

Primary keywords: GST/HST towing audit, CRA roadside assistance audit, taxable towing rules Canada, Mackisen CPA Montreal
Secondary keywords: tow truck ITC denial, subcontract towing audit, impound storage GST, long-distance towing GST/HST

Learning insight: Towing audits produce strong SEO due to industry size and CRA audit frequency.

Why Mackisen CPA Montreal

With 35+ years defending towing fleets, roadside teams, impound operators & subcontract tow drivers, Mackisen CPA Montreal is Québec’s #1 authority for GST/HST towing-sector audits.
We understand dispatch systems, insurance billing, subcontractors, equipment/fleet ITCs, and CRA audit methodology deeply.

Learning insight: These audits require fleet documentation accuracy, subcontractor control, and GST precision — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your towing, roadside rescue, vehicle recovery or storage business, contact Mackisen CPA Montreal immediately:

📞 514-276-0808
📧 info@mackisen.com
🌐 mackisen.com

Learning Conclusion:

A CRA GST/HST Towing & Roadside Assistance Audit tests taxable service fees, subcontractor compliance, ITC documentation, dispatch-log accuracy & interprovincial rate rules.
Mackisen CPA Montreal ensures full protection from reassessments.