Published 12 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
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Get My Free Estimate →The licence most buyers ask me about no longer exists. Ontario’s Motor Vehicle Inspection Station regime was revoked on 1 April 2025, and O. Reg. 170/22 says no motor vehicle inspection station licence or inspection mechanic registration is valid on or after that date. Inspection work now runs through DriveON accreditation, which under the Highway Traffic Act is an agreement authorising a named person to operate a vehicle inspection centre on approved premises. It is not a fixture of the building. Neither is the Toronto public garage licence: Chapter 545 says no person enjoys a right in the continuance of a licence, and its value is the property of the City. Plan on obtaining every authorization yourself, before you open.
The inspection regime you read about online ended in 2025
Most of what is written about buying an Ontario repair shop describes a world dismantled last year. R.R.O. 1990, Reg. 601, the Motor Vehicle Inspection Stations regulation, carries the e-Laws note that it “was revoked on April 1, 2025,” and its replacement, O. Reg. 170/22, says in s. 10(1): “No motor vehicle inspection station licence or motor vehicle inspection mechanic registration is valid on or after April 1, 2025.” No ministry identifying sign may be displayed after 31 March 2025. If you see the old sign in a shop window, that is not an asset. It is a compliance problem. What replaced it is DriveON, the Ministry of Transportation’s program: only accredited DriveON facilities and technicians may conduct the inspections it covers.
Accreditation is an agreement with a person, not a feature of the address
Under Highway Traffic Act s. 100.2(4) the Minister may enter into agreements authorizing persons to operate vehicle inspection centres, and O. Reg. 170/22 s. 7(2) restricts inspections to premises approved by the agreement. The authorization is tied to a named party and to approved premises.
It is not a formality. Section 5(1) says the Director shall refuse an applicant that does not demonstrate the capacity to meet the obligations of the agreement, and s. 5(2) gives no right to be heard, no reasons and no appeal. The discretionary grounds in s. 5(3) include prior refusal or revocation under the old MVIS system, convictions under the Environmental Protection Act related to emissions testing, and a finding that the applicant is “not a fit and proper person… having regard to the applicant’s character, integrity and past conduct.” Subsections 5(3)(h) and (i) extend that test to an owner, shareholder, officer, director or manager of a corporate applicant, and to related persons.
One thing I cannot tell you: the Ministry does not publish what happens to an accreditation when an accredited facility is sold, or whether a buyer can assume the agreement. Anyone who tells you confidently that DriveON accreditation does or does not transfer is stating something the Ministry has not published. Ask the Ministry before you sign, and make the answer a condition.
What attaches to the operator and what attaches to the site
The model: authorizations follow people, orders follow dirt.
| Item | Attaches to | Consequence for the buyer |
|---|---|---|
| DriveON accreditation | A named person, plus approved premises (HTA s. 100.2(4); O. Reg. 170/22 s. 7(2)) | Confirm with the Ministry. Do not assume it survives closing. |
| Toronto public garage licence | The licensee (Ch. 545 § 545-5 E) | Apply in your own name. |
| Environmental Activity and Sector Registry registration | The registration holder | It does not transfer with a sale; the new owner registers. |
| An ECA, Certificate of Property Use or MECP order | The property and its successors (EPA s. 19(1)) | Binding on “any other successor or assignee of the person to whom it was directed.” |
| Historical contamination | Whoever owns or owned, or has or had management or control (EPA s. 18(1)) | Fault is not required. Ownership is enough. |
Technicians register separately, under s. 2(1)(a), and may not inspect outside the scope of their certificate of qualification.
The Toronto licence you must obtain in your own name
In Toronto a repair shop and a body shop share one licence. Chapter 545 defines “public garage” to include “a building or place used as a motor vehicle repair shop or for washing or cleaning motor vehicles,” and § 545-2 item (31) requires a licence for every person who owns or operates one. Section 545-263 sets the classes: class C for a repair shop, class D for one limited to minor or running repairs. Section 545-5 E is the transfer rule: no person enjoys a right in the continuance of a licence, the value of a licence is the property of the City, and no licence transfers except in accordance with the chapter.
The City publishes the package: a non-refundable application fee of $233.02, a licence fee of $288.31, a renewal fee of $350.51, a Criminal Record and Judicial Matters Check and an occupancy declaration. One real concession for a buyer: an Approved Zoning Review for Business Licence is not required if you are taking over an existing business with a valid licence. That often decides whether you open on schedule, so check that the vendor’s licence is current.
If the shop sprays, read § 545-268 D(3). For any place to be used for spray-painting vehicles that was not licensed in the previous year, no licence issues unless the applicant produces the certificate of approval issued under the Environmental Protection Act for the equipment used, where that statute requires one. Whether a given booth needs one is a question for the Ministry and a qualified consultant.
Asset or share purchase, and why the dirt decides
The legal difference is clean. Under the Business Corporations Act a corporation has the rights, powers and privileges of a natural person, so on a share purchase the corporation keeps owning its assets and owing its liabilities and only the shareholdings change. On an asset purchase you take the specific assets named in the agreement. The Ministry of Finance applies the same principle to land transfer tax: “The transfer of shares of a corporation which holds land in its own right does not ordinarily attract tax under the Act,” while tax is payable by every person who tenders a conveyance of land for registration.
On a clean business the structure conversation is mostly tax. On a shop where cars have been repaired for decades it is a contamination conversation wearing a tax costume. Shares mean buying the corporation’s whole history, including what you did not find. Assets leave that history behind — but not the land’s history, because EPA s. 18(1) reaches an owner regardless of fault and s. 19(1) binds any successor to an existing order. That is why the environmental work comes first and the structure follows it; my post on environmental clauses covers how it gets written into an offer.
Hoists and the equipment list
Vehicle hoists are lifting devices under the industrial establishments regulation made under the Occupational Health and Safety Act, R.R.O. 1990, Reg. 851. Section 51(1) requires a lifting device to be examined by a competent person to determine its capability of handling the maximum rated load before first use and thereafter “at least once a year,” with a record kept and signed by the person who did the examination. Section 51(1.1) requires that record to be kept at least a year, or long enough to keep the two most recent records, and the regulation’s exemption table names “A vehicle lift or hoist” at item 7, conditional on it having been certified as meeting current applicable standards.
Those records and that certification are part of what you are buying, and their absence is a cost you inherit on day one. Ask for the signed records for every hoist, by bay, before you agree a value for the equipment.
HST, the section 167 election, and the trap on building purchases
Ontario HST is 13%, and sales of commercial real property are taxable supplies unless specifically exempted. On a going-concern sale, Excise Tax Act s. 167 lets vendor and buyer jointly elect so that tax does not apply to the supply, where the buyer acquires all or substantially all of the property reasonably necessary to carry on the business. CRA reads “all or substantially all” as generally 90% or more of the fair market value of that property, and if the supplier is a registrant the recipient must be one too. The election goes on Form GST44. Goodwill sits outside this: under s. 167.1 the part of the consideration reasonably attributed to goodwill is not included in calculating tax, whether or not the election is filed.
Now the trap. Three carve-outs survive the election, and one bites on the common “buy the business and the building” deal: tax still applies to a taxable sale of real property where the recipient is not a registrant. If your purchasing entity is a fresh numbered company that has not registered for GST/HST, the election does not save you on the building. Register the purchaser before closing. My post on HST clauses covers the drafting.
The short version
Nothing about an Ontario repair shop transfers automatically. The old MVIS licence is abolished, DriveON accreditation is an agreement with a named person and the Ministry has published no transfer mechanism, the Toronto public garage licence is City property you apply for yourself, and environmental registrations must be redone by the new owner. What does follow the property is liability: EPA s. 18(1) reaches any owner regardless of fault. Price the environmental work before you price the goodwill.
The employees come with the business
Employment Standards Act, 2000 s. 9(1) is the provision buyers underestimate: if an employer sells a business and the purchaser employs an employee of the seller, the employment is deemed not to have been terminated, and service with the seller is deemed to be service with the purchaser for any later calculation of length of employment. Section 9(3) defines “sells” to include leases and transfers. Section 9(2) is the only escape: the rule does not apply if the purchaser hires the employee more than 13 weeks after the earlier of their last day with the seller and the day of the sale.
In dollars: a technician with eleven years at the shop whom you keep and terminate three months after closing is owed notice on all eleven years — at least eight weeks under s. 57. Severance under s. 64 arises at five years or more of employment where payroll is $2.5 million or more, capped by s. 65(5) at 26 weeks of wages. Those are ESA minimums; common-law reasonable notice is a separate and larger exposure, and a question for employment counsel.
Financing: what the CSBFP will and will not cover
The Canada Small Business Financing Program is the usual answer for a shop purchase, and its limits are published. A borrower and related borrowers can borrow up to $1,000,000 in CSBF term loans, of which a maximum of $500,000 is for a purpose other than the purchase and improvement of real property the borrower owns or will own. Within that $500,000 for leasehold improvements and equipment, a maximum of $150,000 can finance intangible assets and working capital. A line of credit added on 4 July 2022 adds up to $150,000, for working capital only.
Goodwill on a going-concern purchase is an intangible asset, so it competes with working capital for the same $150,000.
The Guidelines warn that if the borrower rents the premises, the improvements are leasehold improvements and not improvements to real property, and a lender that treats such a loan as a real property term loan can see a claim adjusted because the $500,000 ceiling was exceeded. They also instruct that a going-concern agreement “should set out the allocation of the purchase price for each of the assets listed in the agreement.” Build that schedule with your accountant.
Eligibility bites too: gross annual revenue must not exceed $10 million, a holding corporation is not an eligible borrower, and a trust does not qualify. If you are planning a realty holdco alongside an operating company, read the related-borrower rules — related borrowers that cannot pass the independent small business test share a single $1 million ceiling, and that test requires separate businesses in different premises with neither taking more than 25% of its gross revenues from the other.
Nobody publishes what these shops sell for
Let me be direct, because this is the first question I get. No Canadian government source and no other primary source publishes typical sale values, valuation multiples or pricing formulas for Ontario auto repair or collision shops. MPAC’s methodology material, Ministry of Finance publications, Statistics Canada and the federal industry statistics were all checked, and none publish transaction prices for this business type.
The closest thing is Innovation, Science and Economic Development Canada’s Financial Performance Data, which publishes operating benchmarks by industry and revenue band and expressly does not provide transaction values or business valuations. Nor will assessment data: MPAC confirms that assessments for the 2026 tax year are still based on 1 January 2016 values. So when a listing quotes a multiple, ask whose data it came from. If the answer is “the market,” it came from the intermediary’s own book.
What to demand instead of a multiple
There is an Ontario rule about what a buyer must be shown when a registrant sells a business. It is a good checklist even when no registrant is involved. Under O. Reg. 567/05 s. 21, the registrant must give the buyer — before a binding agreement — statements signed by or for the vendor: a profit and loss statement for the preceding twelve months or since the vendor acquired the business, a statement of assets and liabilities, and a list of all fixtures, goods, chattels and rights relating to the business that are not included in the trade. The sting is s. 21(3): if that third statement is not provided and the agreement does not expressly deal with an item, the item is deemed included in the trade.
Before the condition period ends I want in writing: the Phase One and any Phase Two environmental site assessment and every earlier report the vendor holds; searches of the Environmental Site Registry and the Ministry’s registry for any order, approval or certificate of property use on the property; the current public garage licence with its class and expiry; the signed hoist examination records; the lease and its assignment clause; an employee list with hire dates and wage rates; and the equipment allocation your lender will require.
If the premises are leased, the lease is the deal. Commercial Tenancies Act s. 23(1) deems a covenant against assignment to include a proviso that consent is not to be unreasonably withheld — “unless the lease contains an express provision to the contrary.” A lease can validly give the landlord absolute discretion to refuse, so read the clause rather than the statute, and see my post on commercial lease clauses.
Does the vendor’s DriveON accreditation come with the shop?
I do not know, and neither does anyone quoting you an answer from a listing. The Ministry of Transportation does not publish, on its DriveON page or in O. Reg. 170/22, what happens to an accreditation when an accredited facility is sold or whether a buyer can assume the agreement. What is published is that accreditation rests on an agreement authorising a named person under Highway Traffic Act s. 100.2(4), and that s. 7(2) limits inspections to premises approved by that agreement. Ask the Ministry in writing during your condition period and make the answer a condition of closing.
Can I operate on the seller’s City of Toronto licence until mine issues?
Chapter 545 § 545-5 E says no person enjoys a right in the continuance of a licence, that the value of a licence is the property of the City, and that no licence is transferred except in accordance with the chapter. It also bars carrying on business under any name other than the one endorsed on the licence. Apply in your own name and start early. The one break for a buyer is that an Approved Zoning Review for Business Licence is not required where you are taking over an existing business with a valid licence.
Shares or assets — which is better on a repair shop?
That is a decision for your lawyer and accountant, and on an automotive site it usually follows the environmental findings rather than leading them. Shares keep the corporation, its contracts and its whole history, and avoid land transfer tax on the real estate. Assets let you pick what you take and set your own tax cost, but they attract land transfer tax on the land and they do not shelter you from Environmental Protection Act s. 18(1), which reaches any owner regardless of fault.
Will HST apply to the purchase price?
Ontario HST is 13%, and commercial real property is a taxable supply unless exempted. On a going-concern sale the vendor and buyer can jointly elect under Excise Tax Act s. 167 using Form GST44, where the buyer acquires all or substantially all of the property needed to carry on the business — CRA reads that as generally 90% or more of fair market value. Goodwill escapes tax under s. 167.1 whether or not the election is filed. But tax still applies to a taxable sale of real property where the buyer is not a registrant, so register the purchasing entity first.
Do I have to keep the seller’s technicians?
Nothing in the Employment Standards Act, 2000 forces you to hire them. But if you do hire them, s. 9(1) deems their service with the seller to be service with you for any later calculation of length of employment, and s. 9(3) makes that apply to leases and other transfers as well as sales. The only escape is s. 9(2): the deeming does not apply if you hire more than 13 weeks after the earlier of the employee’s last day with the seller and the day of the sale. Price the accrued notice exposure before closing.
Can I finance the goodwill?
Yes, within a tight ceiling. The Canada Small Business Financing Program treats goodwill on a going-concern purchase as an intangible asset, and intangible assets and working capital together are capped at $150,000 — a sub-limit inside the $500,000 non-real-property limit, which itself sits inside the $1,000,000 term loan maximum. The Guidelines also require the agreement to set out an allocation of the purchase price across the assets, because that allocation proves only eligible assets were financed in each class.
What multiple should I pay?
No Canadian primary source publishes one. Not MPAC, not the Ministry of Finance, not Statistics Canada, not Innovation, Science and Economic Development Canada, whose Financial Performance Data publishes operating benchmarks and expressly not transaction values or business valuations. Any multiple you are quoted comes from the private book of whoever is quoting it. Use the vendor’s financial statements, the asset allocation, the environmental reports and the employee liability, and build your own number from those.
The shop has an old underground tank for heating oil. Does that matter?
It does. Underground fuel oil tanks are registered with the Technical Standards and Safety Authority under O. Reg. 213/01, and TSSA states that an underground storage tank must be removed within three years of disuse under the Fuel Oil Code, with deviations only by variance through its client portal supported by an Environmental Assessment Report. That report must be completed by a qualified person as defined in the Records of Site Condition regulation. An out-of-service tank on a site you are buying is a clock you inherit.
Sources
- Government of Ontario e-Laws — O. Reg. 170/22, Vehicle Inspection Centres
- Government of Ontario — Join the DriveON program
- City of Toronto Municipal Code — Chapter 545, Licensing
- Government of Ontario e-Laws — R.R.O. 1990, Reg. 851, Industrial Establishments
- Government of Ontario e-Laws — Environmental Protection Act, R.S.O. 1990, c. E.19
- Justice Canada — Excise Tax Act, s. 167
- Government of Ontario e-Laws — Employment Standards Act, 2000
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program Guidelines
THINKING ABOUT A REPAIR OR COLLISION SHOP?
If you are looking at a shop in Toronto or the west GTA, I can help you read the premises side of the file — the lease and its assignment clause, the zoning question, what the environmental reports actually say about the site, and how the conditions should be sequenced so you are not committed before you know. The licensing, tax and environmental decisions belong to your lawyer, accountant and consultant, and I will tell you when you need them.
Book a 15-minute call or call or text 833-330-1925.
I am a broker, not a lawyer or an accountant, and I do not price businesses off multiples I cannot source. If you want a number, we build it from the vendor’s documents.
More in this series
Jatin Dua is Broker of Record and co-founder of RE/MAX Quantum Realty, Brokerage, Unit 101, 799 The Queensway, Etobicoke. Four-plus years in the GTA and more than $100M in sales volume. He works on commercial and business purchases across Toronto and the west GTA.
This is general professional commentary from a Broker of Record on commercial and business acquisitions in Ontario. It is not legal, tax or accounting advice, and it does not create any professional relationship. Whether a licence transfers, how a purchase should be structured, what tax applies and what a regulator will require on your particular file are questions for your lawyer, your accountant and the regulator itself. Rules, fees and published requirements change — verify anything you intend to rely on against the primary source on the day you rely on it.