Tax implications

If you are selling your business, you may be able to jointly elect with the purchaser to have no tax payable on the sale if:

Note

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:

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:

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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