Do I have to charge HST when I sell my Ontario business or its assets?

Generally, selling individual business assets (equipment, inventory, commercial property) is a taxable supply, and the seller must charge HST if they are registered. The buyer's ability to claim an offsetting ITC means the HST is often recoverable, but it must still flow correctly.

However, there is an important exception called the "sale of a business as a going concern." Under the Excise Tax Act, if a seller and buyer both agree in writing (using Form GST44) that the sale is a supply of a business (or part of a business) as a going concern, and both parties are registered for HST, the sale can be made without charging HST. The buyer is then responsible for any HST obligations related to the acquired business going forward.

The going-concern election is not available for sales of real property or certain other assets. If the election is made improperly (for example, the buyer is not registered), the seller remains on the hook for the uncollected HST. Asset purchase agreements for Ontario businesses should address HST treatment explicitly and carefully. A tax lawyer should review any business sale agreement involving significant HST exposure.