GST/HST normally applies when you sell your restaurant’s assets — but buyer and seller can jointly elect under section 167, on Form GST44, so no GST/HST applies. Core conditions: the buyer acquires all or substantially all of the property needed to carry on the business, and, generally, both are registrants.
The election has exclusions — your accountant prepares it.
HST is the tax question that surprises restaurant sellers most, because on an asset sale it sits on top of the price: tax on the equipment, the leaseholds, the goodwill. The good news is that a properly made election usually takes it off the table. The bad news is that “properly made” is doing a lot of work in that sentence. Here is how it fits together, at the level of the CRA’s own guide — the execution belongs to your accountant. This is one chapter of the full series on how to sell a restaurant in Ontario.
Does HST apply when you sell a restaurant?
On an asset sale, the starting point is yes. The CRA’s guide on the sale of a business (GST/HST Memorandum 14-4) treats a sale of business assets as what it is — a supply of property — and GST/HST normally applies to taxable supplies. Selling “the business” as a going concern does not by itself change that; without more, the buyer would pay HST on the purchase and then typically look to recover it through input tax credits, which is cash-flow pain and paperwork on both sides of the deal.
That is the problem section 167 exists to solve. If your deal is structured as a share sale rather than an asset sale, the analysis is different from the start — structure and tax interact, which is exactly why the asset-vs-share decision should be made with your accountant before the business goes to market.
What is the section 167 election?
It is a joint election — both buyer and seller make it — under section 167 of the Excise Tax Act, using Form GST44. The CRA’s guide describes the effect plainly: where the conditions are met and the election is made, no GST/HST is payable on the supply of property and services made under the agreement for the sale of the business, subject to specific exceptions. In a typical restaurant deal, that means the equipment, leasehold improvements and goodwill can change hands without HST being charged on them.
The CRA’s guide also sets the filing mechanics: the buyer files the GST44 on or before the due date of their return for the first reporting period in which GST/HST would otherwise have become payable on the transaction. Miss the mechanics and the protection is at risk — which is one more reason this form is prepared by the accountants, not signed as an afterthought at closing.
What conditions have to be met?
Here is the checklist, at the level of the CRA’s guide. Your accountant confirms each one against your actual deal.
| Condition | What the CRA’s guide says | Watch for |
|---|---|---|
| All or substantially all | The buyer acquires ownership, possession or use of all or substantially all of the property needed to carry on the business | Carve-outs — equipment you keep, or assets that stay behind — can threaten the test |
| Registration status | If the seller is a registrant, the buyer must generally be a registrant too | The buyer’s registration should be in place before closing, not after |
| Joint election | Both parties make the election on Form GST44 | It binds both sides; neither can make it alone |
| Filing deadline | The buyer files the form by the due date of their return for the first reporting period in which tax would have become payable | A closing-day signature is not enough if nobody files |
| Exclusions | Certain supplies remain taxable despite the election — e.g. services to be rendered by the seller, property supplied by lease or licence, and a sale of real property to a buyer who is not a registrant | Consulting or transition services from you to the buyer may sit outside the election |
What does “all or substantially all” actually mean?
The phrase comes straight from the statute, and the CRA’s guide glosses it: the buyer should be acquiring ownership, possession or use of all or substantially all of the property necessary to carry on the business, which the CRA generally reads as leaving no more than about 10% of the needed property unacquired. Note the words “possession or use” — property the buyer will use under lease can count, which matters in restaurants where the premises are leased and some equipment is financed. Whether your particular mix of owned, leased and excluded assets passes the test is precisely the kind of judgment your accountant is for.
Whatever happened to the Bulk Sales Act?
Older guides to selling a business in Ontario talk about complying with the Bulk Sales Act, which required a procedure to protect the seller’s creditors on a sale of business assets. That law is gone: as BLG’s commentary records, Ontario repealed the Bulk Sales Act effective March 22, 2017 under the Burden Reduction Act, 2017 — it was the last province to have one. Buyers now protect themselves the modern way, through due diligence and indemnities in the purchase agreement. If a checklist you are reading still demands bulk sales compliance, it is out of date — a good reminder that stale advice is one of the recurring restaurant sale mistakes.
Who handles the HST side of your sale?
Your accountant, with your lawyer papering it. The purchase agreement should deal with the election expressly — that both parties will make it, who prepares and files the GST44, and what happens if the election fails. What you as the seller control is timing: bring your accountant in when the deal is being structured, because the election interacts with everything else on this page — the asset-vs-share choice, the list of included and excluded assets, and any transition services you agree to provide.
How I help
Commercial and business sales, including restaurants, are part of my practice alongside residential work across the GTA. I coordinate the confidential marketing and negotiate the deal — flagging structure questions like this one early — while your lawyer and accountant handle the legal and tax execution, including the section 167 election itself.
The takeaway
HST normally applies to a restaurant asset sale, and the section 167 election on Form GST44 is how buyer and seller usually take it out of the deal — if the buyer is acquiring substantially all the property needed to run the business, the registration status lines up, and the form is actually filed on time. Put it in the agreement, and put it in your accountant’s hands.
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Frequently asked questions
Do I have to charge HST when I sell my restaurant?
On an asset sale, GST/HST normally applies to the assets being sold. But if the conditions are met, you and the buyer can jointly elect under section 167 of the Excise Tax Act, on Form GST44, so that no GST/HST applies to the supplies made under the sale agreement, subject to specific exclusions. Your accountant confirms whether your deal qualifies.
What is Form GST44 and who files it?
GST44 is the CRA form for the joint section 167 election. Both parties make the election, and the CRA’s guide says the buyer files the form on or before the due date of their return for the first reporting period in which GST/HST would otherwise have become payable on the transaction.
What does “all or substantially all” mean for the election?
The buyer must acquire ownership, possession or use of all or substantially all of the property needed to carry on the business — which the CRA’s guide generally reads as leaving no more than about 10% of the needed property unacquired. Leased premises and equipment the buyer will use can count, but carve-outs can threaten the test.
Do I still need to comply with the Bulk Sales Act?
No. Ontario repealed the Bulk Sales Act effective March 22, 2017 under the Burden Reduction Act, 2017. Buyers of business assets now protect themselves through due diligence and contractual indemnities instead of the old statutory bulk-sales procedure.
Sources
- CRA GST/HST Memorandum 14-4 — Sale of a Business or Part of a Business. The section 167 election, Form GST44, the “all or substantially all” condition, registration requirements, filing deadline and exclusions. Accessed 13 August 2026.
- BLG — The Bulk Sales Act (Ontario) repealed. Repeal effective March 22, 2017 under the Burden Reduction Act, 2017. Accessed 13 August 2026.
Related reading
- How to sell a restaurant in Ontario: the complete process
- Asset sale vs share sale: which way to sell your restaurant?
- The mistakes that sink Ontario restaurant sales
About the author — Jatin Dua
Jatin Dua is a licensed Realtor with RE/MAX Quantum Realty in Etobicoke, Toronto. Commercial and business sales — including restaurants — are part of his practice, alongside residential work across the GTA. Content on this site is checked against primary sources — the CRA, the AGCO and ontario.ca — before publication.
Reach me at connect@jatindua.com or 437-987-1925.