If I only sell part of my business, can we still use the section 167 election to avoid HST?

Potentially, yes, the section 167 election isn't limited to selling an entire business; it can apply to the sale of just part of a business, as long as that part is itself capable of being operated as a business, or part of a business, on its own, and the purchaser is acquiring all or substantially all of the property necessary to carry on that specific part.

The key is that the portion being sold has to function as a distinct, viable business activity in its own right, a genuinely separable division, product line, or location with its own operations, rather than a random selection of assets carved out of a single, integrated operation that doesn't work on its own. Selling off, say, one branch's equipment and customer contracts while keeping the rest of an integrated operation intact can qualify if that branch could realistically be run as a standalone business by the purchaser; selling an arbitrary slice of assets that can't function independently generally won't.

Because whether a partial sale meets this "separate business" and "all or substantially all" standard is a fact-specific judgment call with real consequences if it's wrong, get this analyzed by your advisor against the specific part of the business being sold before relying on the election.