Asset Purchase Agreement Template (Canada)

Asset sale is selective

An asset sale can include equipment, stock, goodwill, business names, domains, IP, vehicles, customer records, work in progress, deposits, licences and contracts. The buyer normally takes only the assets and liabilities listed, subject to laws that preserve obligations or service.

The agreement uses schedules for included assets, excluded assets, assumed liabilities, retained liabilities, contracts, employees, records and completion deliverables. That makes completion operational rather than symbolic.

GST/HST Form GST44 is conditional

CRA says that if a buyer buys a business or part of a business and acquires all or substantially all, meaning at least 90%, of the property that can reasonably be regarded as necessary to carry on the business, buyer and seller may be able to jointly elect to have no GST/HST payable by filing Form GST44.

The election cannot be used if the seller is a registrant and the buyer is not a registrant, and it does not apply where the buyer buys only individual assets. The form must be filed on or before the GST/HST return due date for the first reporting period in which tax would otherwise have been payable.

Employees and provincial continuity

Employment consequences are provincial and fact-specific. Ontario guidance says where a business is sold and the purchaser employs an employee of the seller, service is treated as continuous for ESA entitlements determined by length of employment. BC guidance says if all or part of a business is disposed of, employment is deemed continuous and uninterrupted for the Act.

The agreement therefore asks whether employees are offered employment, whether service is recognized, what liabilities are assumed and whether union, pension, benefit, vacation, termination or severance issues need separate advice.

Contracts, IP, PPSA and privacy

Contracts may require assignment, novation, notice or consent. Benefits can sometimes be assigned, but a full transfer of obligations generally needs counterparty consent or novation. Public contracts, regulated licences, software and leases can be more restrictive.

Customer and employee records may contain personal information. OPC guidance requires limiting use and disclosure to identified purposes and secure disposal or anonymization where information is no longer needed. The buyer should receive only data it is entitled to use and protect.

Completion evidence and tax basis

Completion should deliver payment, bills of sale, IP assignments, releases, PPSA discharges, consents, notices, stock count, keys, passwords, domain controls, employee documents and records. A contract that omits deliverables leaves control unresolved after payment.

The agreement also records purchase price allocation. CRA notes inventory is treated as goods for resale and goodwill or certain intangible property is depreciable Class 14.1, so allocation can matter for tax and accounting.

Clause-by-clause guide

Asset schedule

Lists tangible assets, stock, goodwill, IP, contracts, records, domains and excluded assets.

Price and allocation

Sets price, deposit, apportionment, inventory, goodwill and tax allocation.

GST/HST election

Records whether Form GST44 is expected and what happens if conditions fail.

Liabilities

Separates assumed liabilities from retained liabilities and indemnities.

Employees

Records provincial continuity, offers, service, entitlements and employee information.

Contracts and consents

Identifies assignments, novations, notices and third-party approvals.

Privacy and records

Controls handover of customer, supplier and employee data.

Completion deliverables

Lists transfer documents, releases, keys, passwords, domain codes and stock count.

Canadian asset-sale checklist

• Check the GST44 election conditions

  CRA says the election may be available where all or substantially all, at least 90%, of necessary business property is acquired and other conditions are met.

  CRA - buying an existing business

• Do not use GST44 for individual assets

  CRA says the election is for a business or part of a business, not only individual assets.

• Check employment continuity by province

  Ontario and BC guidance both preserve service in sale-of-business situations where statutory conditions are met.

  Ontario ESA - continuity of employment

• Map contracts and novations

  Contracts may need consent, novation or separate assignment documents before benefits and obligations transfer.

• Check PPSA and secured assets

  Search and release security interests, leases and liens before completion where relevant.

• Protect personal information

  Customer and employee data handover should follow identified purposes, security safeguards and disposal rules.

  OPC - PIPEDA principles

• Allocate purchase price for tax evidence

  Inventory, goodwill and depreciable property can have different treatment and should be scheduled.

How to complete the agreement

1. Build schedules. List included assets, excluded assets, contracts, IP, employees, records and liabilities.
2. Set price and taxes. Enter price, allocation, GST/HST treatment and Form GST44 evidence if relevant.
3. Check employees. Record provincial continuity analysis, offers, entitlements and liabilities.
4. Map consents. Identify assignments, novations, PPSA releases, landlord consents and licence transfers.
5. Prepare completion. List transfer documents, payment evidence, keys, passwords, domain codes, stock count and notices.

Frequently asked questions

Related templates

• Asset Register Template (Canada)
• Assignment and Assumption Agreement Template (Canada)