What happens if I structure the deal to avoid HST but the CRA decides it wasn't really a going concern?

If the CRA decides after the fact that the transaction didn't actually meet the going-concern test, the joint election is treated as never having applied, and HST is considered to have been payable on the sale all along. That means an assessment for the tax that should have been collected, with interest accruing from the original transaction date, and potentially penalties if the CRA views the structuring as more than an honest mistake — deliberately dressing up a sale to look like it qualifies, when the underlying facts don't really support it, is treated more seriously than a genuine but incorrect judgment call.

Because the vendor is generally the party responsible for collecting and remitting HST in the first place, this exposure typically lands on the seller first, even though the buyer benefited from not paying HST at closing. Purchase agreements addressing this election should include a mechanism — an indemnity, a gross-up obligation, or both — requiring the buyer to cover any HST later found payable, precisely because this risk is real and doesn't disappear just because both sides agreed on the paperwork at the time.

Getting an honest, documented assessment of whether the sale genuinely qualifies, rather than structuring around the test, protects both parties.