In this article, we highlight joint tax elections companies
should consider filing in asset purchase transactions in Canada.
These elections will not only save companies time, but they will
also relieve taxpayers from hassles down the road.
A GST/HST election under section 167 of the Excise Tax Act
(Canada) is one of the most commonly used elections. This
joint election applies to sales where a buyer receives all or
substantially all of the property that is reasonably necessary for
the buyer to carry on the seller's business or part of the
seller's business. When the election applies to an asset
purchase agreement, GST/HST will generally not apply to the assets
being sold under the agreement. This election will save the buyer
the hassle of claiming input tax credits to recuperate GST/HST that
it would have otherwise paid. The joint election can be made even
if the vendor or the purchaser is a non-resident. It must be made
using Form GST44 and be filed by the purchaser
