How do I check a business for unpaid taxes?

A business can look financially healthy on its balance sheet and still owe the Canada Revenue Agency money that never made it onto the sheet a seller shows you, because unremitted amounts don’t always appear as a clearly labelled liability until someone actually asks the CRA directly.

The three places unpaid tax tends to hide

• Corporate income tax, where a filed return does not necessarily mean the resulting balance was actually paid
• GST or HST collected from customers but not remitted, which is money the business held in trust rather than earned
• Payroll source deductions withheld from employees but not remitted, which carries its own distinct exposure

Asking for confirmation directly

A clearance certificate, or an equivalent written confirmation of good standing, is the CRA’s own statement of a corporation’s tax position, and it is a far more reliable source than a seller’s assurance that everything is up to date. Request this early enough that a problem it reveals does not become a last-minute surprise before closing.

Why deal structure matters here specifically

In a share purchase, you generally step into the corporation’s existing tax history, unpaid amounts included. An asset purchase can limit that exposure, but certain tax debts can still follow specific assets or trigger obligations for a buyer in defined circumstances, so the structure decision and the tax-standing check need to happen together, not separately.

Building it into the closing mechanics

Make confirmed tax standing a condition of closing, with a holdback or specific indemnity as a backstop if the seller cannot produce clean confirmation in time. A seller with genuinely clean standing has little reason to resist this request, and one who resists it is telling you something worth taking seriously.