GST44 election: no GST/HST on a business sale if the buyer gets 90%

Which buyer and seller combinations can make the election?

Three of the four combinations qualify. The one that fails is a registered seller selling to an unregistered buyer: subsection 167(1) bars the election when the supplier is a registrant and the recipient is not laws-lois.justice.gc.ca. The 2026 version of the form lists the three that work and says where the form goes canada.ca.

"Registrant" means a person registered or required to be registered, so a small supplier that never registered is unregistered here canada.ca. The common trap is a sole proprietor transferring the business to a new corporation that hasn't registered yet. Register the corporation before closing, as our incorporating a business page explains. A buyer that is a selected listed financial institution uses Form RC7244 instead of GST44 canada.ca.

The buyer must get 90% of the property the business needs

The seller has to supply a business, or part of one, that it established or carried on, and the buyer has to get ownership, possession or use of all or substantially all of the property needed to carry on that business laws-lois.justice.gc.ca. The CRA reads "all or substantially all" as 90% or more, and any property the buyer needs but gets elsewhere has to fit in the remaining 10% of fair market value canada.ca.

Worked example: a buyer needs $960,000 of property to run a distribution business. It gets $900,000 from the seller and buys a $60,000 delivery van from a dealer.

The test passes at 93.75%. If the van cost $120,000 instead, the seller would supply $900,000 of $1,020,000, or 88.2%, and the election would fail.

Selling one or more individual assets isn't selling a business canada.ca. "Part of a business" can qualify when it is a functionally and physically discrete operating unit, or a separately organized activity capable of operating on its own canada.ca.

How much HST does the election save on an Ontario sale?

Using the same sale in Ontario at 13% HST, with a registered seller, a registered corporate buyer and $30,000 for six months of consulting from the seller after closing:

Goodwill shows $0 in both columns because section 167.1 removes the price reasonably attributable to goodwill whenever the 90% conditions are met, election or not laws-lois.justice.gc.ca. The land and building don't show up on the seller's invoice either way: a seller doesn't collect tax on real property sold to a registered buyer under paragraph 221(2)(b) laws-lois.justice.gc.ca. The buyer self assesses instead, and a registrant buying mainly for commercial use reports that tax on its regular return laws-lois.justice.gc.ca.

For a fully taxable buyer, most of the $104,000 difference is cash flow, because it would claim the tax back as input tax credits. The election matters more when the buyer's use isn't fully commercial. A registrant buyer is deemed to acquire capital property for use exclusively in commercial activities where tax would otherwise have been payable laws-lois.justice.gc.ca, and the CRA then applies the change in use rules to the real property it actually uses partly in exempt activities canada.ca.

Which supplies stay taxable even with a valid election?

Three kinds of supply are carved out of subsection 167(1.1): a taxable service the seller will render, a taxable supply of property by lease, licence or similar arrangement, and a taxable sale of real property when the buyer is not a registrant laws-lois.justice.gc.ca.

The lease rule catches a seller who keeps the building and rents it to the buyer. Use of the building under the agreement still counts toward the 90% test, but HST applies to the rent. The CRA treats a franchise fee covering training and a trade name licence the same way: the assets transfer with no tax and the fee is taxable canada.ca.

The real property rule only bites when the buyer is unregistered, which happens when both parties are unregistered. A small supplier selling a commercial building with its business to another unregistered person still charges tax on the building canada.ca.

When is Form GST44 due?

A registrant buyer has to file the election by the due date of its return for the first reporting period in which tax would otherwise have become payable, and the CRA can allow a later date if the buyer applies laws-lois.justice.gc.ca. The form says to send it with the return for the period in which the acquisition was made, or to file it through the "File an election" service in My Business Account or Represent a Client, in which case you don't mail the paper form canada.ca.

Worked example: a buyer that files quarterly on the calendar year closes on August 14, 2026 and pays the price that day. The period is July 1 to September 30, 2026, so the election is due with that return on October 31, 2026. That date is a Saturday, and a return received on the next business day, November 2, is on time, as our GST filing deadline page shows.

Part C of the form asks for the acquisition date, the buyer's reporting period and a description of the property: land, building, equipment, inventory, vehicles and intangibles such as goodwill. Both parties sign canada.ca. A buyer that files paper returns sends the form with that return, to the address on the return. A buyer that files its return electronically files the election online or mails the form to the Sudbury Tax Centre canada.ca. On the income tax side, receivables sold with the business have their own joint election, the section 22 election.