Government Remittances - PST, GST & Source Deductions

GST Joint Election on the Sale of Business

If you are buying all or substantially all of a business (asset purchase .. not a share purchase), and both the buyer and seller are GST registrants (they have GST numbers), then the buyer and seller can jointly elect to not charge and collect PST. However, in that case, the parties must sign a GST Form 44 election and the purchaser must file it with their GST return covering the period of time that includes the closing date.

GST & Employee Source Deduction Remittances - Liability

If you are a director of a corporation that has failed to make government remittances, you can be personally liable to the Government of Canada for unpaid GST and source deductions.

If you are buying a business, you will want to ensure that the seller is current on GST remittances and employee source deduction remittances. If the seller is in arrears, they are deemed to hold all of their property in trust for the federal government ... meaning they don't have good title to sell the property to the buyer and the government can seize it from the buyer.

PST on Sales of Used Business Equipment

A sale of a business (asset sale) usually involves the sale of used business equipment. In Saskatchewan, the buyer of used busines equipment must pay PST on the value of the equipment to the provincial government. This includes machines, shelving, etc. Either the seller collects the PST and remits it to the province or if they opt not to, the buyer must self-report and pay the PST. If the buyer is starting a new business and getting a new PST number, this will flag the issue with the Sask Department of Revenue.

Notice:The information on this website is general in nature only. It relates to Saskatchewan, Canada and may not be applicable in your jurisdiction. It does not constitute legal advice to you and no solicitor client relationship will be established. A conflict check would also be required before our firm can act for someone. You should seek specific legal advice regarding your circumstances from a lawyer entitled to practise law in your jurisdiction.
* Richard Carlson Legal Prof. Corp. | Friday, Jun 21 2024 16:52 pm UTC1 (-6 hrs for Sask)