Do the buyer and seller both need to sign the section 167 HST election?

The election lets a seller and a buyer treat the sale of a business, or part of one, as free of GST/HST. Because the CRA describes it as a joint election, the practical answer is that both sides must take part. The remaining questions are who files, by when, and what can disqualify the sale, and those are where deals most often go wrong.

What joint means in practice

The CRA says a seller may be able to jointly elect with the purchaser, using Form GST44. The purchaser files the form with the CRA no later than the due date of its next GST/HST return in which tax would have been payable had the election not been made. The buyer therefore owns the filing deadline, even though the seller’s agreement is part of making the election at all.

Who can make it

The CRA says the election can only be filed by a registrant selling to another registrant, or by a non-registrant selling to either a registrant or a non-registrant. It cannot be made where only individual assets are sold, or where a registrant sells to a purchaser who is not a registrant. The purchaser must also acquire a minimum share of the property needed to carry on the business, which the CRA sets out in its guidance.

What the election leaves outside

Even with a valid election, the seller still charges GST/HST on taxable services to be rendered to the purchaser, on taxable supplies of property by way of lease or licence, and on taxable sales of real property to a purchaser who is not a registrant. Provincial taxes follow their own rules: British Columbia’s Ministry of Finance says a purchaser should have a PST clearance certificate before buying a business. The guide on GST/HST on a business sale gives the wider context.