Am I liable for a seller’s unpaid provincial sales tax?

Provincial sales tax is set by each province that charges it, so what a buyer inherits from a seller is a matter of provincial law rather than federal law. This page uses British Columbia’s published guidance as a worked example of how such a rule can work. It is not a statement of the rule in any other province.

British Columbia’s clearance certificate rule

The B.C. Ministry of Finance says a purchaser should hold a clearance certificate before buying a business, or before buying goods, software or an interest in a business through a bulk transaction. The certificate confirms the seller, called a collector, has paid all outstanding PST with penalties and interest up to the date it was issued. Without one, the purchaser is liable for an amount equal to whatever the collector still owes.

Getting the certificate

The seller can apply for duplicate copies of the certificate and give one to the buyer, and the buyer may, with the seller’s consent, request a copy directly from the ministry. Because a certificate speaks only to the date it was issued, how it lines up with the closing date is worth raising with your lawyer early.

Your own PST is a separate question

Apart from the seller’s debts, a buyer may owe PST on the taxable assets bought. In B.C., if the seller is not a collector or does not charge PST on those assets, the purchaser must self-assess and remit the tax on their next return, or file a casual remittance return if they have no PST number.

GST/HST runs on a different track

The CRA says a seller and purchaser can jointly elect for no GST/HST to be payable on the sale if the conditions are met, and the purchaser files form GST44. That election concerns tax on the sale itself and does not settle a seller’s earlier provincial debts. For the wider checks, see how to check a business for unpaid taxes.