Bookkeeping for auto repair shops in Canada
Parts are cost of sales; lifts and scan tools are assets. The rule particular to repair shops is core charges: the GST/HST is charged on the part including the core charge, and what happens when the old part comes back depends on when it comes back.
Where the money goes in your books
What a auto repair business usually spends on, and the account in a Canadian chart of accounts it belongs in. The numbers are the account codes in Spark’s starting chart.
| What you pay for | Account |
|---|---|
| Parts bought for customer jobs | 5000 Purchases and materials |
| Shop supplies: oil, fluids, rags, cleaners | 5000 Purchases and materials |
| Lifts, scan tools and compressors | 1500 Equipment and furnitureAssets, not expenses. |
| Shop rent | 6700 Rent |
| Repair-information and shop-management software | 6520 Software and subscriptions |
| Garage liability insurance | 6200 Insurance |
| Technicians' wages | 6800 Wages and benefitsThrough a payroll service. |
| Card processing fees | 6310 Bank fees |
How a chart of accounts works · The whole chart, as a template
The tax rules that are different for you
Each one is from the CRA, checked in October 2026. The link goes to the page it came from.
GST/HST on a core charge
When you sell a part with a core charge, the core charge is part of the price, and you charge GST/HST on the total.
CRA: GI-167, core chargesOld part handed over at the same time: tax on the net
If the customer trades in the old part when they buy the new one, GST/HST is charged on the price less what you credit them for the old part.
CRA: GI-167, core chargesOld part brought back later: a separate purchase
If the customer brings the old part back after the sale, the trade-in rules don't apply. You're buying the old part from them. A customer who isn't registered for GST/HST doesn't charge you any on it.
CRA: GI-167, core chargesRecords to keep
- Work orders showing parts and labour separately for each job.
- Supplier invoices and core credits from your parts suppliers.
- Core charges and core refunds by customer.
- Warranty claims sent to manufacturers or warranty companies, and what was paid.
Common mistakes
- Refunding a core charge and calling it a sales return, when it's a separate purchase.
- Booking a $15,000 lift as an expense.
- Lumping parts and labour into one sales line, so you can't see your margin on either.
- Parts bought for your own car on the shop account.
How Spark Books handles it
Fits, with limits
Fits a shop that buys parts per job. Not a shop that stocks and counts parts.
What it does
- Sorts parts, supplies, rent and equipment payments, with the GST/HST split out.
- Sends invoices and marks them paid when the customer's payment lands.
- Reads a photo of a parts invoice and attaches it to the payment.
What it doesn’t
- No inventory. If you keep a parts room you count and cost, pick software that tracks stock.
- It doesn't track core charges outstanding by customer.
- No payroll for technicians.
- No live bank feed: you upload statements. Not available in Quebec yet.
Free, with no card. If you’d rather not do it yourself, a Spark bookkeeper keeps your books for $350 a month. How Spark Books works
Questions
- Do I charge GST/HST on a core charge?
- Yes. The core charge is part of the price of the part, so GST/HST is charged on the total.
- Do I charge GST/HST on the refund when the customer returns the core?
- If the old part is handed over at the time of sale, you charge tax on the net price. If it comes back later, that's a separate purchase by you, and a customer who isn't registered charges no GST/HST on it.
- Are shop supplies an expense?
- Yes, if they're used up on jobs: oil, fluids, rags and cleaners. Tools and equipment that last for years are assets.
- Can a repair shop use Spark Books?
- If you buy parts for each job as you need them, yes. If you hold a stock of parts you count and cost, no: Spark Books has no inventory.
Read next
- A chart of accounts for a small business in Canada (with template)A sample Canadian chart of accounts, numbered and mapped to CRA GIFI codes, with the GST/HST, shareholder loan and owner's draw accounts most templates miss.
- How to reconcile a bank accountBank reconciliation for small businesses: how to reconcile a bank statement to your books, step by step, with a worked example and how to find a difference.
- Equipment leasing or an equipment loan: which one?Who owns the machine, how the payments and sales tax fall, what happens at the end, and how to choose between a lease and a loan in Canada.
- Financing for auto shopsWhat a lender reads in a auto repair file, if you need financing.
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