How to Get a Clearance Certificate for GST/QST When Selling Business Assets — Montreal CPA Firm Near You

Introduction
When selling business assets in Quebec whether you’re transferring equipment, inventory, or an entire division both GST (Goods and Services Tax) and QST (Quebec Sales Tax) may apply. To protect the buyer and seller from future tax liabilities, Revenu Québec and the Canada Revenue Agency (CRA) require that a Clearance Certificate (also called a “certificate of compliance”) be obtained.

This certificate confirms that all GST/QST obligations up to the date of sale have been met, and that no hidden tax debt will transfer to the buyer. Without this certificate, buyers can become personally liable for the seller’s unpaid sales taxes under the Excise Tax Act and the Tax Administration Act (Quebec).

At Mackisen CPA Montreal, we help business owners prepare and obtain GST/QST Clearance Certificates quickly and efficiently, ensuring smooth and compliant asset sales or business transfers.

Legal and Regulatory Framework
The requirement for a Clearance Certificate is established under:

• Excise Tax Act (Canada) s. 270(1) — makes the purchaser jointly liable for the vendor’s outstanding GST/HST unless a certificate is obtained.

• Tax Administration Act (Quebec) s.14 & s.15 — provides similar liability provisions for QST in Quebec.

• Revenu Québec Policy Bulletin TVQ.206.6 — explains clearance certificate procedures for QST purposes.

• Taxation Act (Quebec) s.407 — governs QST obligations on taxable business asset sales.

Both CRA and Revenu Québec require a clearance certificate before or immediately after the sale to confirm that the seller’s account is in good standing.

1. Understand When a Clearance Certificate Is Required

You must obtain a clearance certificate if:

• You are selling all or substantially all of your business assets.

• You are transferring a business or division to another company or individual.

• You are selling taxable assets, such as equipment, inventory, or real property.

• You are dissolving or winding up your business.

Why it matters:
If the buyer doesn’t obtain the clearance certificate, they can be held liable for any unpaid GST/QST or interest owed by the seller prior to the sale.

Example:

• A restaurant owner sells all kitchen equipment to a new operator for $100,000.

• The seller owes $15,000 in unremitted QST.

• If no clearance certificate is issued, Revenu Québec can recover the $15,000 from the buyer.

2. Distinguish Between Two Types of Clearance Certificates

For businesses operating in Quebec, you generally need both certificates.

3. Prepare Documentation Before Applying

Before submitting your request, gather:

• Legal name and business number (BN / NEQ).

• QST and GST account numbers.

• Copy of the asset purchase agreement or letter of intent.

• List of assets being sold (equipment, vehicles, goodwill, inventory, etc.).

• Date of sale or intended transfer date.

• Confirmation that all tax filings and payments are up to date.

• Seller’s financial statements or trial balance (if requested).

If taxes are outstanding, you must pay them before Revenu Québec or CRA will issue a certificate.

4. How to Apply for the Clearance Certificate (Step-by-Step)

A. For QST (Revenu Québec):

1. Complete Form VDZ-471-V — Application for a Clearance Certificate.

2. Submit via:

   • The Mon Dossier online portal, or

   • By mail to Revenu Québec’s business client services office.

3. Include supporting documents:

   • Asset purchase/sale agreement.

   • Proof of payment of all QST returns up to the transfer date.

   • Current balance statement showing no outstanding QST liabilities.

4. Revenu Québec will verify your account and issue the certificate if all conditions are met.

B. For GST (CRA):

1. Complete Form RC4288 — Request for Clearance Certificate.

2. Submit by mail or electronically through CRA’s My Business Account portal.

3. Include copies of recent GST/HST returns and the purchase agreement.

4. CRA will issue a GST Clearance Certificate confirming no amounts are owing.

Processing Time:

• Typically 2–6 weeks, depending on account status and documentation completeness.

5. Provide the Clearance Certificate to the Buyer

Once you receive both certificates:

• Deliver copies to the buyer before finalizing payment.

• Keep originals for your business records.

• Attach them to the closing documents (e.g., Bill of Sale or Notarial Deed).

This ensures the buyer is legally protected against any of your prior GST/QST debts.

6. Special Case: Sale of a Business as a “Going Concern”

If you are selling a complete business operation (rather than just individual assets), both parties can jointly file an election to avoid charging GST/QST on the sale.

Conditions (under Excise Tax Act s.167 and Taxation Act s.75):

• The business is sold as a going concern (operating and capable of continuing immediately).

• The buyer is registered for GST/QST.

• Both parties file the election forms:

  • CRA Form GST44, and

  • Revenu Québec Form FP-2044.

Even in this case, a Clearance Certificate is still recommended to confirm that the seller’s past GST/QST obligations are settled.

7. Keep Records and Proof of Compliance

Revenu Québec and CRA can audit past periods for up to four years after the sale. Maintain:

• Clearance Certificates (GST and QST).

• Asset purchase/sale agreements.

• Proof of payment for prior remittances.

• Correspondence with both agencies.

• Copies of final GST/QST returns filed before sale.

At Mackisen CPA Montreal, we prepare a Sale & Clearance Compliance Binder that includes all required documents to protect both the seller and buyer in case of future audits.

Jurisprudence and Legal Insight
Courts have upheld strict liability rules for buyers and sellers under the clearance certificate provisions:

• Lac d’Amiante du Québec Ltée (SCC 2001) — confirmed Revenu Québec’s authority to pursue unpaid QST even after a business transfer.

• Canderel Ltd. v. Canada (SCC 1998) — reiterated that tax filings and compliance must reflect true commercial transactions.

• Hickman Motors Ltd. v. Canada (SCC 1997) — affirmed that CRA assessments are presumed correct until proven otherwise by the taxpayer.

These decisions emphasize that obtaining a clearance certificate is the only guaranteed protection against future GST/QST liability after a business sale.

8. How Mackisen Helps You Obtain Your Clearance Certificates Quickly

At Mackisen CPA Montreal, we guide both sellers and buyers through the entire clearance process:

1. Pre-Sale Audit – We review your GST/QST filings to confirm compliance.

2. Balance Reconciliation – We identify and resolve any outstanding liabilities.

3. Form Preparation & Submission – We complete and submit CRA and Revenu Québec applications.

4. Follow-Up & Expedited Processing – We track your request until the certificates are issued.

5. Legal Coordination – We work with your notary or lawyer to include the certificates in the sale documentation.

Mackisen Service Hub: Sale & Clearance Certificate Management
Our Mackisen Service Hub provides end-to-end support for business sale compliance:

• Clearance certificate applications (GST/QST).

• Going-concern election filing.

• Audit readiness and documentation tracking.

• Bilingual coordination with CRA and Revenu Québec.

Our bilingual CPA auditors and tax lawyers trained at McGill, Université de Montréal, and Concordia University ensure that your business transfer is legally airtight and tax compliant.

Real Client Example
A Laval manufacturing company sold its assets for $2.1M without obtaining clearance certificates. Months later, Revenu Québec assessed the buyer for $186,000 in unpaid QST. Mackisen CPA intervened, reviewed prior filings, paid outstanding balances, and secured retroactive clearance certificates. The buyer’s liability was canceled, and the sale was successfully finalized.

Why Mackisen
With over 35 years of combined CPA and legal experience, Mackisen CPA Montreal ensures that every business sale or asset transfer is free of future tax risk. We manage the clearance process from start to finish protecting both parties and ensuring full compliance with CRA and Revenu Québec.

When you sell with Mackisen, your exit is clean, compliant, and completely protected from first negotiation to the final certificate.