• FP-2044 - Election Respecting the Acquisition of a Business or Part of a Business

Who must complete this form?

This form must be completed by both the recipient of a business (or of a part of a business) and the supplier (or the persons authorized to sign on behalf of the recipient and the supplier) in order to jointly elect to have the GST/ HST and QST not apply to the supply of the business (or the part of a business). Some restrictions apply.

Note: If the supplier is a registrant and the recipient is not a registrant, this election cannot be made.

Eligibility

The supplier and the recipient can jointly make this election if they meet all of the following conditions:

• The supplier makes a supply of a business (or of a part of a business) that was established or carried on by the supplier, or that was established or carried on by another person and acquired by the supplier.
• Under the agreement for the supply, the recipient acquires ownership, possession or use of all or substantially all of the property necessary for the recipient to be capable of carrying on the business (or the part of a business) as a business.
• One of the following situations applies:
  • the supplier and the recipient are both registrants;
  • the supplier and the recipient are both non-registrants; or
  • the supplier is a non-registrant and the recipient is a registrant.

Under the QST system, if the recipient is a large business and does not carry on the business (or the part of a business) acquired, the supplier and the recipient can jointly elect that the recipient not have to pay the QST. This only applies to property entitling the business to an ITR, since the restrictions relating to an ITR apply to large businesses.

Exclusions

This election does not apply to the following supplies:

• a taxable supply of a service to be rendered by the supplier;
• a taxable supply of property by way of lease, licence or similar arrangement; and
• a taxable sale of real property, if the recipient is not a registrant.

What is the effect of the election?

Where all of the eligibility conditions are met and the election is made, the supplier does not have to collect the GST/HST or the QST on the supply of the business (or the part of a business), and the recipient does not have to pay the GST/HST or the QST on the supply. Some restrictions apply.

Where do I send the form?

A recipient that is a registrant must send this form, together with the recipient's GST/HST and QST return for the reporting period during which the acquisition was made, to the address specified on the return. If the recipient is filing the GST/HST and QST return electronically, this form must be sent to one of the following addresses:

• 3800, rue de Marly
  Québec (Québec)  G1X 4A5
• C.P. 3000, succursale Place-Desjardins
  Montréal (Québec)  H5B 1A4

Where the supplier and recipient are both non-registrants, this form need not be sent. Instead, the recipient must keep this form on file in case of a future audit.

For more information

For more information, go to the Revenu Québec website at www.revenuquebec.ca or call one of the following numbers: 514 873-4692 (Montréal area), 418 659-4692 (Québec City area) or 1 800 567-4692 (toll-free).

Definitions

All or substantially all – generally means 90% or more.

Business – includes a profession, calling, trade, manufacture or undertaking of any kind, whether or not the activity or undertaking is engaged in for profit, and any activity engaged in on a regular or continuous basis that involves the supply of property by way of lease, licence or similar arrangement, but does not include an office or employment.

Part of a business – Revenu Québec considers that a part of a business generally includes

• an activity that may be a functionally and physically discrete administrative unit; or
• an activity that supports or is related to the broader business but is organized as a separate and self-supporting activity.

Property – means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money.

Recipient (of a supply of property or a service) – means,

• where consideration for the supply is payable under an agreement for the supply, the person who is liable under the agreement to pay that amount;
• where the preceding point does not apply and consideration is payable for the supply, the person who is liable to pay that amount;
• where no amount is payable for the supply:
  • in the case of a supply of property by way of sale, the person to whom the property is delivered or made available;
  • in the case of a supply of property otherwise than by way of sale, the person to whom possession or use of the property is given or made available;
  • in the case of a supply of a service, the person to whom the service is rendered.

Registrant – means a person that is registered or has to be registered for the GST/HST and the QST.

Supplier (vendor) – means the person making the supply.

Supply – means the provision of property or a service in any way, including sale, transfer, barter, exchange, licence, rental, lease, gift, and disposition.