Do I need to register for GST/HST after buying a business?

Registration follows the person making the supplies, not the business that was bought. Under the Excise Tax Act, every person who makes a taxable supply in Canada in the course of a commercial activity must be registered unless an exception applies, and the first exception listed is being a small supplier. A person who is not required to register but is engaged in a commercial activity in Canada may still apply to. A buyer therefore ends up in one of three positions: required to register, not required, or free to choose.

Asset purchase: the seller’s account closes

When the business being sold has a GST/HST account, the CRA tells the seller to contact its tax services office to close it. For a sole proprietorship, the CRA says the business is tied to one individual, so a new owner cannot continue using the old business number and must get a new one with new program accounts. Whether the buyer must register is then tested on the buyer’s own supplies.

Share purchase: the company stays the registrant

In a share purchase the company that holds the registration is still the company after closing. The CRA’s guidance on owner changes in a corporation is to update the corporate registry first, then send the CRA supporting documents so it can update its business and owner information.

Provincial sales tax registration

BC’s Ministry of Finance says a newly purchased business that must collect PST has to be registered before it makes any taxable sales or leases in British Columbia. That is a provincial rule, so check with the provincial revenue office as well as the CRA wherever the business operates.

Where the choice matters: the section 167 election

The Act lets a supplier and recipient jointly elect that no GST/HST is payable on most supplies made under a qualifying sale of a business, except where the supplier is a registrant and the recipient is not, and the CRA repeats that limit. A buyer below the small-supplier line is not required to register, but if the seller is a registrant the election is unavailable unless the buyer is one too. Whether to register in order to use it is a question for an accountant. A registered buyer files the election by a deadline tied to its return for the first reporting period in which tax would otherwise have been payable. Who signs the election is covered separately.