How do I sell my business in Ontario, and where do I start?
Selling a business in Ontario starts with a big choice: you can sell the shares of your corporation or have the corporation sell its business assets. When the corporation sells its assets, the gain belongs to the corporation and the share-based lifetime capital gains exemption does not apply to it directly.
If you sell qualifying shares as an individual, the lifetime capital gains exemption for 2025 is $1,250,000, which gives a maximum deduction of $625,000. If part of the price is paid after the tax year ends, you may claim a reasonable reserve, and the gain is generally taxed over no more than five years.
Other steps depend on your deal. In an asset sale, employees the buyer hires keep their length of service with you, unless the buyer hires them more than 13 weeks after the earlier of their last day with you or the sale. Form GST44 lets you and the buyer elect that no GST/HST is payable if the buyer acquires all or substantially all of the property needed to run the business, but not if you are a registrant and the buyer is not, and tax can still apply to services, leases and some real property. Confirm your path with a lawyer and an accountant.
Key takeaways
- Decide early whether you will sell shares or assets, because the lifetime capital gains exemption is for an individual selling qualifying shares and not for a corporation selling its assets.
- If the buyer pays over time, a reserve usually spreads the gain over no more than five years, or up to 10 years when qualifying shares are sold to your child.
- A sale of all or substantially all of a corporation's property needs shareholder approval by special resolution, and a dissenting shareholder may seek fair value.
- If you take back a loan, registering your security under the Personal Property Security Act helps you avoid ranking as an unsecured creditor if the buyer becomes insolvent.