Ontario Repeals its Bulk Sales Act

March 28, 2017

Ontario’s Burden Reduction Act, 2017, received Royal Assent on March 22, 2017. As a result, the province’s Bulk Sales Act (BSA) is now officially repealed. Dating back almost exactly a century – the first Ontario BSA was passed in April 1917 – the legislation had by general consensus outlived its usefulness. Ontario was the last province to still have bulk sales legislation.

As our related post from June 2016 noted, M&A transactions structured as asset sales have often had to resort to compliance waivers, coupled with indemnities, to avoid the costs and delays that compliance with the BSA would otherwise have involved. In certain cases, clients had to resort to bringing an application to court to waive compliance with the BSA.  Thanks to the repeal, these workarounds are no longer necessary.

As a footnote, there will be no change to the existing requirement under section 6 of the Retail Sales Tax Act (RSTA) that certain businesses requiring operating permits obtain a Minister’s certificate with respect to provincial tax obligations prior to proceeding with an asset sale that is caught by the BSA. The RSTA has accordingly been amended to refer to the BSA “as it read immediately before it was repealed”. The requirement under section 6 of the RSTA thus continues to apply (i) to sellers who held or who were required to hold a permit under the RSTA on or before June 30, 2010 and (ii) to sellers who, at any time after June 30, 2010, hold or are required to hold such a permit. The provincial tax obligations in question include retail sales tax as well as fuel tax, tobacco tax and others.

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