Do You Pay Land Transfer Tax Buying Shares vs Assets in Ontario?

If the business you want to buy owns its building or land, the way you structure the deal can change whether you pay Ontario land transfer tax. Buying the assets and buying the shares are treated differently, and the difference can look attractive on paper.

But land transfer tax is only one piece. A share purchase brings the corporation's history with it, including tax and workplace safety obligations. This article explains the land transfer tax difference, the exceptions, and the costs to weigh against any saving.

Asset purchase: you pay land transfer tax on closing

In an asset purchase, you buy the business property directly from the corporation, including any land. A buyer who acquires land or a beneficial interest in land pays Ontario land transfer tax when the transaction closes.

If the transfer is not registered within 30 days of closing, you must file a return and pay within 30 days after closing. The actual rates depend on the property and the municipality, so they are not set out here. Toronto also has its own municipal tax, and its brackets changed on 1 April 2026. A lawyer or the Ministry of Finance can confirm the amount for your property.

Share purchase: the land stays with the corporation

In a share purchase, you buy the shares of the corporation and the corporation keeps owning the land. The Ministry of Finance says a transfer of shares of a corporation that holds land in its own right does not ordinarily attract land transfer tax, because the corporation's property belongs to the corporation and not to its shareholders.

That is the source of the saving. But the word "ordinarily" matters. There are situations where a share transfer is still taxed.

Exceptions where a share transfer is still taxable

• Equity co-operatives: where shares carry a right to exclusive occupation of a unit, the disposition is taxable under s. 3 of the Land Transfer Tax Act.
• Trustee corporations: a share transfer involving a corporation that holds only legal title as trustee may be a taxable change in beneficial ownership.
• Timing: tax under s. 3 is payable on the 30th day after the disposition.

If the corporation holds the land for someone else, or the shares give a right to occupy specific space, do not assume the share route avoids tax. Ask a lawyer to review how the land is actually held before you rely on any saving.

What a share purchase carries with it

When you buy shares, you step into the corporation as it is. Any saving on land transfer tax should be compared with these costs.

There is an exception for business losses. Non-capital losses from before the acquisition can still be deducted afterwards, but only if that business is carried on for profit or with a reasonable expectation of profit.

By contrast, in an asset purchase the WSIB will issue a purchase certificate on request if the seller's account is in good standing. The certificate waives the buyer's liability, is valid for 30 days from its issue date, and a separate certificate is needed for each account. The WSIB will not process a request while the seller's account has an issue under appeal.

Weighing the saving and deciding what to do next

A land transfer tax saving may be real, but it can be outweighed by inherited risk. Directors can have a defence if they exercised the care, diligence and skill a reasonably prudent person would have used to prevent the failure, and CRA cannot start an action more than two years after a person last ceased to be a director. Those points help the former directors more than they help you as the new owner of the corporation, so they are worth understanding but not relying on.

• Find out exactly how the land is held: by the corporation in its own right, or as trustee.
• Check whether any shares carry a right to occupy a unit.
• Ask for the corporation's payroll remittance and WSIB history.
• Review the corporation's tax losses and what you expect to use.
• Ask a lawyer to compare the total cost of both structures, not just land transfer tax.
• Ask an accountant how the structure affects the seller's tax, because that often affects price.

Sellers often prefer share sales for their own tax reasons, so the structure is usually negotiated. Get legal and accounting advice before you sign a letter of intent.

Frequently asked questions