Is GST/HST charged when a non-resident sells a business in Canada?

A non-resident seller of a business in Canada is not automatically outside GST/HST, and not automatically inside it. The Excise Tax Act sets a general rule for non-residents, a separate rule for real property, and an election available to any seller of a business. The answer for a given seller depends on its facts, which are for the CRA or a qualified adviser to assess. For the rules that apply to any seller, see do I charge HST when I sell my business.

The rule for supplies by non-residents

Section 143(1) provides that, for Part IX, a supply of personal property or a service made in Canada by a non-resident person is deemed to be made outside Canada, unless the supply is made in the course of a business carried on in Canada, the person is registered when the supply is made, or one of the other listed cases applies, such as the supply of an admission. The section speaks of personal property and services. It does not itself say when a seller carries on business in Canada, so confirm that point with the CRA or an adviser.

Registration

Section 240(1) requires every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada to be registered, except where, among others, the person is a non-resident person who does not carry on any business in Canada. A seller that does carry on business in Canada is therefore outside that exception.

Real property is placed differently

A business sale can include land or a building. Section 142(1)(d), which is subject to sections 143, 144 and 179, deems a supply of real property, or of a service in relation to real property, to be made in Canada if the real property is situated in Canada. A supply of the real property itself is not among the supplies section 143(1) names, which are personal property and services.

The section 167 election

Section 167(1) lets the supplier and the recipient of a business make a joint election where the recipient acquires ownership, possession or use of all or substantially all of the property that can reasonably be regarded as necessary to carry on the business, except where the supplier is a registrant and the recipient is not. Where it is made and the recipient, if a registrant, files it with the Minister on time, no tax is payable on the supplies under the agreement other than those listed in section 167(1.1)(a). See GST/HST on a business sale for the conditions.