What has to be included in a business sale for it to qualify for the section 167 no-HST election?

The core requirement for the section 167 election is that the purchaser is acquiring ownership, possession, or use of all, or substantially all, of the property that's reasonably necessary for the purchaser to be capable of carrying on the same kind of business the vendor operated with that property. The test looks at whether what's being sold amounts to a functioning business or business operation, not simply a collection of assets that happen to belong to a business.

This generally means the sale needs to include the operational essentials, things like equipment, inventory, key contracts, and goodwill associated with running that particular business, rather than, say, just a building the business happened to occupy, or an isolated piece of equipment sold on its own without the rest of the operation. A sale that leaves out something genuinely essential to operating the business as it existed can fail the "all or substantially all" test even if most of the assets are included.

Because "substantially all" is a qualitative and factual test rather than a precise mathematical formula, and getting it wrong means the whole election fails and HST applies after all, the specific list of assets in your deal should be reviewed against this test by your advisor before the sale closes.