Selling a business

When selling your business or even part of your business, there are things that you need to know. The following information will help you when selling your business:

Business number (BN)

If the business you are selling has a business number (BN), it is important to contact your tax services office, since you might have to cancel your BN. To find your tax services office, go to Tax services offices and tax centres.


If the business you are selling has employees, you must close your payroll account. For more information on how to close your payroll accounts, see Changes to your business entity in Guide T4001, Employers' Guide – Payroll Deductions and Remittances.

Goods and services tax/harmonized sales tax (GST/HST)

If the business you are selling has a GST/HST account, you must contact your tax services office to close the account. For more information, go to Closing a GST/HST account.

Change of ownership

It is important that you contact your tax services office whenever an owner of a sole proprietorship, a partner in a partnership, or a member of a corporation's board of directors changes.

Depending on your business structure, a change of owner(s) will have a different impact on your business. Depending on your partnership agreement and whether or not your business was registered using the legal names of each partner or the provincially registered partnership operating name, it could trigger a legal name change or require the registration of a new Business Number (BN) and CRA program accounts. For corporations, it is important that we have the correct name and social insurance number (SIN) for each director.

Value of the inventory and other assets

If you are selling your business or part of your business, you generally set an amount for the entire business. In some cases, your sales agreement sets out a price for each asset, a value for the inventory of the company and, if applicable, an amount that can be attributed to goodwill.

Depending on your situation, you may have a recapture or a terminal loss of capital cost allowance (CCA) on the sale of your assets.

You may also have sold an eligible capital property. If this is the case, you have to subtract part of the proceeds of disposition from your cumulative eligible capital (CEC) account. For more information, go to eligible capital expenditures.


As of January 1, 2017, the eligible capital property (ECP) system was replaced with the new capital cost allowance (CCA) class 14.1 with transitional rules. For more information, see Class 14.1 (5%) in Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

Capital gains deduction

If you realized taxable capital gains from the disposition of qualified farm property or qualified small business corporation shares, you may be eligible to claim a capital gains deduction. For more information, go to Line 25400 – Capital gains deduction.

Tax implications

If you are selling your business, you may be able to jointly elect with the purchaser to have no GST/HST payable on the sale. You can make this choice if the following two conditions apply:

  • you are selling the business that you established or carried on
  • under the agreement for the sale, the purchaser acquires ownership, possession, or use of at least 90% of the property that can reasonably be regarded as being necessary for the purchaser to be capable of carrying on the business as a business


You may also be eligible to make this election if you are selling part of your business. For information on what constitutes "part of a business," go to Form GST44, Election Concerning the Acquisition of a Business or Part of a Business.

Any property not acquired under the agreement but that the purchaser needs to carry on the business has to fall within the remaining 10% of the fair market value (FMV) of all the property acquired. For example, when real property, such as land and a building, is not included in the supply but is purchased elsewhere, it and any other property purchased should not exceed 10% of the FMV of all the property required to carry on the business.

As well, the purchaser has to be capable of carrying on the same kind of business that you established or carried on with the property that the purchaser has acquired under the agreement.

This election can only be filed by either:

  • a registrant when selling to another registrant
  • a non-registrant when selling to either a registrant or a non-registrant

This election cannot be made if you sell only one or more assets of your business, or if you are a registrant and the purchaser is not.

You still charge GST/HST on the following supplies, even if you and the purchaser made the election:

  • taxable services to be rendered to the purchaser
  • taxable supplies of property by way of lease, licence, or similar arrangement
  • taxable sales of real property to a purchaser who is not a registrant

To make this election, use Form GST44, Election Concerning the Acquisition of a Business or Part of a Business. The purchaser has to file the form with us no later than the due date of their next GST/HST return in which tax would have been payable if the election had not been made.

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