Do I Need a New CRA Business Number When Buying a Business in BC?

You are buying a business in British Columbia and the seller has a CRA business number with GST/HST and other program accounts attached. It is natural to ask whether you can simply carry on using them. The answer depends on what you are actually buying and who ends up owning it.

This article explains how the structure of the deal, buying assets or buying shares, affects your tax accounts. It also covers the PST and GST/HST steps that often come up at the same time. An accountant or lawyer can confirm how this applies to your deal.

This article covers the law of British Columbia.

The short answer: it depends on the deal

A change of owners may require a new CRA business number and program accounts. The word is "may": whether you need new accounts turns on how the purchase is structured and who the owner will be afterwards.

Because of that, it is risky to assume you can step into the seller's accounts. Ask the CRA, or your accountant, to confirm what is needed before closing so that your first filings are made under the right account.

Asset purchase versus share purchase

In an asset purchase you buy the business's assets, such as equipment, inventory and goodwill. In a share purchase you buy the shares of the corporation that owns the business, so the company itself stays in place.

In a share purchase, the corporation continues to exist, but you should still tell the CRA about the change in who runs it, as discussed below.

What the CRA needs after a change of owners

For corporations, the CRA needs the correct name and social insurance number of each director. If directors change on a share purchase, make sure the CRA has current information.

You can also check who the current directors of a BC company are. A corporate search produces a company summary and a Notice of Articles showing current directors.

• Confirm whether your purchase requires a new business number or new program accounts.
• Give the CRA the correct name and social insurance number of each director if the company is a corporation.
• Keep the allocation of the purchase price consistent with what the seller reports.

GST/HST and PST accounts on a purchase

For GST/HST, a seller and buyer may jointly elect on Form GST44 so that no GST/HST is payable on the sale, if the buyer acquires all or substantially all (at least 90%) of the property needed to carry on the business. A registrant buyer files the election by the due date of its first relevant GST/HST return.

The election is not available where the supplier is a registrant and the recipient is not. Even with the election, GST/HST can still apply to certain services, leases and licences.

For PST, a new business must register before making any taxable sales or leases in B.C.. A buyer without a PST number must self-assess PST on taxable items using the Casual Remittance Return (FIN 405) on or before the last day of the month following the month of purchase.

Buyers should also obtain a PST clearance certificate before buying a business, including in bulk transactions. Without one, the buyer is liable for an amount equal to any outstanding amount owed by the seller. The buyer applies online or by Application for Clearance (FIN 447), with the collector's consent.

What to do next

• Decide with your advisers whether you are buying assets or shares.
• Ask the CRA or your accountant whether you need a new business number and program accounts.
• Check whether you hold a PST number, and register before taxable sales if you do not.
• Request a PST clearance certificate before closing.
• Ask whether the GST44 election is available and who will file it.
• Agree on the price allocation and make sure it matches what the seller reports.

Because the right steps depend on the facts, a lawyer or accountant can confirm which accounts you can keep and which you must open before you close.

Frequently asked questions