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:

• you are selling the business that you established or carried on; and
• 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.

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.

Related links

• Canada Business Network
• Related provincial and territorial government sites
• Innovation, Science and Economic Development Canada