Required Clearance Certificate and Section 6 Retail Sales Tax

Persons who sell their business or business assets (known as an Asset Purchase Agreement), in whole or in part, through a sale in bulk to which the Bulk Sales Act applies, are required to obtain a Clearance Certificate from the Ministry of Revenue. A Clearance Certificate certifies that all Retail Sales Tax (RST) collectable or payable by the seller has been paid or secured. It also protects the purchaser from the responsibility for the outstanding RST liabilities of the seller. Where the Bulk Sales Act applies to a sale in bulk, the purchaser is required to obtain from the seller a copy of the Clearance Certificate obtained by the seller (As purchaser, I highly recommend that you receive such certificate PRIOR to closing). If the purchaser fails to obtain a Clearance Certificate from the seller, the purchaser may be held liable for any RST owing by the seller at the time of the sale.The Bulk Sales Act may apply where there is a sale of stock (i.e., fixtures, goods, chattels) in bulk out of the usual course of business or trade of the seller. To determine whether the Bulk Sales Act applies to a particular situation, sellers and purchasers should consult their respective legal advisor or contacting me should they have any questions.

In certain circumstances, such as where RST is owed by the seller or where an audit has been scheduled but not completed prior to the closing date of the sale, the Ministry of Revenue may require funds to be held back from the proceeds of the sale prior to issuing the Clearance Certificate or the seller may be asked to agree in writing to a condition being placed on the certificate.

All requests for Clearance Certificates must be made in writing, at least two weeks before the sale takes place, and signed by the seller or the seller's authorized representative. The request should be sent by mail or fax to their nearest Ontario Ministry of Revenue Tax Office.

Our local office:

Ottawa Tax Office
Ontario Ministry of Revenue - MOR
1400 Blair Place, Suite 300Gloucester, Ontario
K1J 9B8
Telephone: 613-746-9200
Fax: 613-842-3593
Toll-free (information):1-800-461-4909