How to sell a business in British Columbia: PST, transfer tax and your staff

A sale in British Columbia adds provincial rules to the national stages. A gain at the top bracket costs about 26.75 percent. In an asset sale the buyer pays 7 percent PST on equipment and other goods and wants a clearance certificate. Property transfer tax applies to any building at market value, and staff service passes to the buyer.

What belongs to British Columbia

If you plan to sell a business in BC, the stages are the ones every Canadian sale runs through, set out in our guide to how to sell a business in Canada. British Columbia adds rules of its own. It charges a provincial sales tax on business assets and taxes a building at market value when title moves. A one sentence rule in its Employment Standards Act then decides who owes your staff.

The national rules apply alongside them. The lifetime capital gains exemption shelters up to $1,275,000 of gain on qualifying shares in 2026, and the choice between a share sale or an asset sale decides how many of the BC rules below apply to you.

British Columbia at a glance

PST and property transfer tax arise mainly in an asset sale, where the buyer takes the equipment and the building into its own name. Each row is explained below with its source.

The tax rate on your gain in BC

The CRA’s 2026 table of provincial rates sets British Columbia’s top bracket at 20.5 percent on taxable income above $265,545. With the federal top rate of 33 percent, ordinary income at the top is taxed at 53.5 percent. Half of a capital gain is taxable, so each dollar of gain above the exemption costs about 26.75 cents, which is our arithmetic from those rates.

Take, as an illustration, a share sale that leaves $1 million of gain above the exemption. The tax at 26.75 percent is about $267,500, within a few hundred dollars of the same gain in Ontario. The same gain in Alberta costs about $240,000. Alternative minimum tax and the timing of each payment are in the taxes when you sell a business.

PST and the clearance certificate

British Columbia runs its own provincial sales tax beside the federal GST, at 7 percent according to the CRA’s sales tax rate calculator. The GST44 election under section 167 of the Excise Tax Act deals with the federal 5 percent, and the CRA’s page on buying an existing business requires the buyer to take at least 90 percent of the property needed to run the business. That election reaches the GST alone. PST follows its own rules.

The province’s page on buying and selling a business applies PST to the goods and software in the sale, such as equipment and furniture, including machinery fixed to the building. Goodwill and accounts receivable sit outside it. Real property does too, since the building falls under property transfer tax instead. Inventory the buyer will resell is exempt once the buyer gives you its PST number or a completed Certificate of Exemption, FIN 490.

Where the assets sell for one price, PST is charged on the fair market value of the taxable ones. The province expects goodwill to carry a reasonable value, and a price moved from equipment into goodwill to lower the PST is caught by that rule. Take, as an illustration, equipment worth $500,000 in a $3 million sale: the PST is $35,000. If you are registered to collect PST you charge it and remit it, and if you are unregistered the buyer self assesses.

A buyer of a BC business should obtain a clearance certificate, which confirms that the seller has paid all PST owing up to its date, with any penalties and interest. Under the same provincial page, a buyer who closes ahead of a certificate is liable for an amount equal to whatever the seller still owes. The buyer applies online or on Form FIN 447, with your consent.

In practice the certificate becomes a closing condition, so bring your PST filings up to date in the year before the sale. An audit question still open on closing day can hold the money back, and a holdback or escrow is the usual way a buyer covers it.

Property transfer tax when the building is included

British Columbia charges property transfer tax on the fair market value of the land and buildings on the day the transfer is registered. The rate starts at 1 percent on the first $200,000 and rises to 2 percent up to $2 million, with value above $2 million taxed at 3 percent. A further 2 percent applies to residential value above $3 million, and on mixed property only to the residential part.

On a $1.5 million commercial building the tax is $2,000 on the first $200,000 and $26,000 on the remaining $1.3 million, a total of $28,000. The base is market value, so a building priced low inside a business sale is taxed at what it would fetch on its own. Keeping the building and leasing it to the buyer takes the transfer out of the sale, and net proceeds from selling a business shows how either choice lands on your side.

Your employees under section 97

Section 97 of BC’s Employment Standards Act is a single sentence: where all or part of a business is disposed of, employment is deemed continuous and uninterrupted for the purposes of the Act. The province’s interpretive guide to section 97 explains the result. If the buyer later ends that employment, it owes compensation for length of service counted from the day you hired the person.

Accrued vacation pay passes to the buyer as well, payable when the employee next takes vacation. The rule runs the other way for anyone you let go before the sale. The guide’s example is an employee with five years of service terminated on May 1 for a sale closing May 5, who is owed five weeks by the seller, since the buyer took over after the job had ended. The human side of all this is in what happens to your employees.

Two further points come up in BC sales. Ontario’s statutory ban on employee non-competes belongs to Ontario’s own Act, and the covenant a BC buyer will ask of you is covered in non-competes when selling a business. Electrical contractors in BC name a field safety representative on the licence, and the guide to HVAC and electrical businesses explains why a buyer asks who holds that role. Residential builders hold a BC Housing licence, and selling a construction company covers what changes when the company changes hands.

Where to start

1. 01Bring every PST return up to date, since the buyer’s clearance certificate depends on it.
2. 02Split the asset list into taxable goods and exempt items such as goodwill and receivables, each at a value you can support.
3. 03Ask your accountant to run your own gain at BC’s rates and to check that your shares qualify for the exemption.
4. 04List each employee with a start date, because the buyer inherits that service.
5. 05If the company owns its building, get an appraisal at market value and decide whether to sell the building or lease it to the buyer.

For a business with sites in other provinces, the guides for Ontario and Quebec set out their own rules. Who to hire for a BC sale, and how to check each person, is in hiring a business broker in BC. A buyer applying through the BC Provincial Nominee Program brings rules of its own, set out in selling to a BC PNP buyer. To see where your company stands before any of this, the Quick AI valuation gives an early range in a few minutes, before you give anyone your name.

The provincial tax and regulatory requirements, regions and buyers are set out on selling a business in British Columbia.

Questions owners ask

Is PST charged when I sell my business assets in BC?

PST at 7 percent applies to the goods and software in the sale, such as equipment and furniture, at their fair market value. Goodwill and accounts receivable sit outside it, and inventory the buyer will resell is exempt once the buyer gives you its PST number or Form FIN 490. A share sale moves the company, so its assets stay where they are.

What is a PST clearance certificate?

It is a certificate from the province confirming that the seller has paid all PST owing up to its date. A buyer who closes ahead of one is liable for any amount the seller still owes, so buyers apply for it on Form FIN 447, with the seller’s consent, before closing.

What happens to my employees when I sell my business in BC?

Section 97 of the Employment Standards Act deems their employment continuous through the sale. The buyer owes compensation for length of service counted from your original hire date if it later ends the job, and takes over accrued vacation pay. You remain responsible for anyone you let go before the sale closes.

How much property transfer tax applies if my business sale includes a building?

The buyer pays 1 percent on the first $200,000 of fair market value and 2 percent up to $2 million. Value above $2 million is taxed at 3 percent, and on a $1.5 million commercial building the tax is $28,000.