Do I have to pay HST when I buy a business in Ontario?
It can be, but you may be able to avoid it with a joint election. When you buy a business's assets, GST/HST may otherwise be payable on the sale, but if you acquire all or substantially all (at least 90%) of the property needed to carry on the business, you and the seller can jointly elect on Form GST44 so that no GST/HST is payable. The buyer must be able to continue operating the business with the property acquired.
The election has limits. It cannot be used if the seller is a GST/HST registrant and the buyer is not. Even with it, GST/HST still applies to services the seller supplies, to property supplied by lease, licence or similar arrangement, and, if the buyer is not a registrant, to a taxable sale of real property. Form GST44 must be filed on or before the day your GST/HST return is due for the first reporting period in which GST/HST would otherwise have been payable.
Buying the shares of a corporation is generally not subject to GST/HST. If you think the deadline has been missed, speak to an accountant or lawyer promptly, because the outcome depends on the facts.
Key takeaways
- Buying business assets can attract GST/HST, but buying the shares of a corporation is generally not subject to it.
- If you acquire at least 90% of the property needed to carry on the business, you and the seller can jointly elect on Form GST44 so that no GST/HST is payable.
- The election cannot be used if the seller is a registrant and the buyer is not, and GST/HST still applies to some items such as the seller's services and property supplied by lease or licence.
- Form GST44 is due by the day your GST/HST return is due for the first period in which tax would otherwise have been payable, and it can be filed through My Business Account.