Published: August 2005
Content last reviewed: August 2013

Businesses are required to obtain a clearance certificate from the Minister of Finance under the Retail Sales Tax Act (RSTA) for sales to which the Bulk Sales Act applies. To enhance the effectiveness of clearance certificates, the 2011 Budget amended the RSTA to allow the minister to withhold clearance certificates until tax debts under the following additional statutes were paid or secured: the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996; Fuel Tax Act; Gasoline Tax Act, Race Tracks Tax Act and Tobacco Tax Act.

Persons who sell their business or business assets, 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 Finance. 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. 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 should consult their legal advisor.

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 Finance 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 fax to 905 436-4474 or by mail to:

Ministry of Finance
Collections Branch
33 King Street West
PO Box 627
Oshawa ON  L1H 8H5

The following information should be included in the written request for a Clearance Certificate:

  1. Legal name and business/trade name of seller
  2. Address and telephone number of seller
  3. Forwarding address of seller
  4. Date of sale/closing
  5. Details of the sale, i.e., sale of assets, sale of shares, etc.
  6. Whether the sale is for a portion of the assets only
  7. Description of assets included in the sale and value if known
  8. RST Vendor Permit number (if applicable)
  9. Whether the Vendor Permit is to be cancelled
  10. Purchaser's legal name, address and telephone number
  11. Written authorization from the seller allowing the release of confidential account details if the request is made by a third party (i.e., seller's representative)
  12. Whether the Clearance Certificate is to be mailed, or picked up

The information contained in this publication is only a guideline. For more information on the sale of business assets, contact the Ontario Ministry of Finance at 1 866 ONT-TAXS (1 866 668-8297).