Selling a gas station in Canada

A gas station is really several businesses on one piece of land: fuel, a store, often a car wash, plus lottery and other services. Buyers and their lenders look at the litres, the margins, the supply agreement and the ground under the tanks together. Here is what to expect, how to prove your numbers and how the approvals and taxes usually work, with British Columbia examples and notes for other provinces.

What buyers look at first

Most gas station buyers ask the same questions early. Have clear answers ready before you list:

• Fuel volume. Litres sold each month for three years, split by regular, mid grade, premium, diesel and any propane, with the busy and quiet seasons shown.
• Fuel margin. Your margin in cents per litre, month by month. The retail price matters less than what is left after the cost of the fuel and any commission or rebate from your supplier.
• The store. Convenience store sales by category with the gross margin on each, since tobacco, lottery and phone cards bring traffic but little margin, while coffee, food and snacks earn more.
• Other income. The car wash, propane cylinder exchange, air and vacuum machines, ATM fees, lottery commissions, rent from a quick service restaurant or other tenant on the lot, and any supplier rebates.
• Costs. Wages, card processing fees, power, property tax or rent, insurance, repairs, tank testing and inspections, and franchise or branding fees.
• Your time. The hours you and your family cover, who handles fuel orders and the night shift, and who could run the station after you leave.

Buyers will check these during due diligence, so it helps to gather them now. Our list of documents needed to sell a business is a good start.

Proving the litres and the margins

Buyers trust fuel numbers that tie together. Keep the reports from your point of sale and pump controller, your fuel delivery invoices, your daily tank readings and reconciliations, and your supplier statements, and make sure litres sold, litres delivered and the change in tank stock line up month by month. A buyer will divide your fuel gross profit by your litres to check the margin you quote, and will ask how often the price is set by you and how often by the supplier.

For the store, keep monthly sales by category from the point of sale system and supplier invoices for the main categories. Match the totals to your bank deposits, card processor statements, GST and PST returns and tax returns. If you cannot show a sale on paper, most buyers and lenders will not pay for it. If you and your family work shifts without a wage, list those hours and what it would cost to pay someone, and show personal costs run through the business as add backs with proof.

The fuel supply or branding agreement

Most stations buy fuel under a supply agreement with a refiner, a branded marketer or a jobber, and many fly that company's brand. The agreement is often the most important contract in the sale. Find the signed copy and check how many years are left, any minimum litres you must buy, how the price and your margin or commission are set, who owns the pumps, canopy and signs, and what happens on a sale.

Many agreements say the dealer cannot assign the agreement or sell the station without the supplier's consent, and some give the supplier a right of first refusal to buy the station on the same terms as a buyer's offer. Some also require repayment of signing bonuses, image upgrade money or loans if the station is sold or changes brand early. Ask for the supplier's process in writing before you sign an LOI, and give the buyer time to meet the supplier. If the buyer wants to change brands, the cost of new signs, pumps and the canopy is part of their price. See transferring contracts, licences and permits and selling a franchise business.

The land, tanks and environmental checks

For a station that owns its land, the ground under the tanks is often the buyer's and lender's biggest worry. Most will ask for a Phase I environmental site assessment, which reviews the site's history, records and neighbours, and often a Phase II, which takes soil and groundwater samples around the tanks, lines and pumps. Gather any past reports, tank installation and removal records, leak detection and tank testing results, spill reports and any cleanup work, and be ready for the buyer's consultant to drill on site.

In British Columbia, Schedule 2 of the Contaminated Sites Regulation lists petroleum product dispensing facilities, including service stations and card locks, as a specified use. The Province says that when you sell a property that has had a Schedule 2 use, you generally must give the prospective buyer a site disclosure statement unless an exemption applies, and that this copy is not submitted to the ministry. Under sections 45 and 47 of the Environmental Management Act, current and previous owners and operators of a contaminated site can be responsible for remediation, and that liability is absolute, retroactive, and joint and separate. This is why buyers ask for reports, price in risk, ask for holdbacks or indemnities, and why sellers should get advice before closing. See holdbacks.

Storage tank rules depend on where the station is. The federal Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations apply to tank systems on federal land or aboriginal land, and to systems run by federal bodies and some federal undertakings; on those sites each system must have an identification number from the federal government, and changed information must be sent within 60 days. Most stations on private land are covered by provincial and local fire and safety rules instead. In Ontario, for example, section 25 of the Liquid Fuels regulation says a retail fuel outlet licence is not transferable, the new licence holder must apply right away, and a buyer may operate for up to 90 days after applying while waiting. In BC, ask your local fire department what permits and inspection records it holds for your tanks, and share them with the buyer.

If you lease the land, the lease is a large part of the value. Check how long is left, the renewal options, who owns the tanks, who is responsible for contamination and tank removal at the end of the lease, and whether the landlord must approve a new tenant. See your commercial lease when selling and selling a business and the building.

Fuel tax and the end of BC carbon tax

Under section 34 of BC's Motor Fuel Tax Act, a retail dealer must collect motor fuel tax at the time of sale and remit it to the collector or deputy collector, usually the supplier, or to the Province. The Province's fuel sellers bulletin says a collector appointment is needed when a person sells fuel for the first time after it is made in or brought into BC, which is usually the supplier rather than the station. If your station sells coloured (dyed) fuel, it needs its own authorization, and section 14.1 of the Act says an authorized person must not delegate or transfer that authority, so a buyer applies in their own name.

The Province says the BC carbon tax was eliminated effective April 1, 2025, and that fuel sellers no longer need collector appointments under the Carbon Tax Act. Motor fuel tax is still in effect. When you show a buyer three years of fuel margins, point out any months before April 2025 where carbon tax was in the pump price, so the price comparison is fair. Other provinces have their own fuel tax rules, so check with your province's finance ministry.

Lottery, tobacco, vape and liquor

In British Columbia, BCLC's Lottery Retailer Agreement says the retailer may not assign it without BCLC's consent, and BCLC may end it if the retailer sells the business without its approval. A new owner signs their own agreement and, after that, registers with the Independent Gambling Control Office, which says it cannot process a registration until a BCLC contract is in place. Contact your BCLC territory manager early so the terminal keeps working through the change.

The Province says a tobacco retail authorization is not transferable and is issued to a specific business at a specific location, and that a person who buys a business that sells tobacco must apply for a new one; approval takes about 10 business days. For vape products, a business must give the Ministry of Health a notice of intent at least 6 weeks before first selling them, along with product reports, so a buyer who wants to keep selling should file well before closing. If the site also has a liquor store, that licence follows its own transfer process; see selling a liquor store in Canada.

Staff and customer information

Stations rely on cashiers and shift staff, often with a manager or two. In British Columbia, section 97 of the Employment Standards Act says that when a business is sold, the employment of an employee is considered continuous, so a buyer who keeps your staff takes on their years of service. See what to tell employees.

Fleet accounts, car wash memberships, loyalty programs and staff files include personal information. In British Columbia, section 20 of the Personal Information Protection Act lets a business share personal information with a prospective buyer without consent, but only if it is needed to decide whether to go ahead and the buyer agrees to use it only for the deal. Share totals and summaries first, under a confidentiality agreement, and hand over full records at closing. If you have a car wash, our car wash guide covers memberships, equipment and wash water.

Asset sale or share sale

In an asset sale the buyer buys the land or lease, the equipment, the goodwill and the stock, and applies for the permits, authorizations and agreements in their own name. In a share sale the buyer buys the company, so it keeps its permits and contracts, but also keeps its history, including any environmental, tax or employment issues, and many supply and lottery agreements still need consent on a change of control. Buyers of fuel sites often prefer an asset sale for that reason, while sellers sometimes prefer a share sale for tax. See asset sale vs share sale.

Fuel in the tanks and store stock are usually counted at closing and paid for at cost, on top of the price. Agree in writing how tank readings are taken, how lottery tickets and tobacco are counted, and how fleet account balances and prepaid washes are credited. See selling a business with inventory and closing day adjustments.

Taxes on the sale

When a registered buyer acquires all or substantially all of what is needed to carry on the business, the section 167 election on Form GST44 can often remove GST/HST on the sale. The CRA's memorandum on commercial real property says that when the buyer of commercial real property is registered, the seller is not required to collect the tax and the buyer self assesses and remits it instead. In British Columbia, the Province says PST does not apply to goodwill or to inventory bought for resale, but generally applies to taxable goods in the sale such as equipment, and that a buyer should get a PST clearance certificate before buying a business.

When the land is sold, the buyer pays BC property transfer tax when the title is registered: 1% of fair market value up to $200,000, 2% from $200,000 to $2,000,000 and 3% above $2,000,000. It is based on the land and buildings, not goodwill or equipment, which is one reason the price split matters. Your accountant should work through this for your deal; see GST and PST when selling and taxes when selling a business.

A simple worked example

These numbers are made up and rounded for illustration only. Your own deal, margins, timing and tax will differ.

Questions to take to your lawyer and accountant

• Should this be an asset sale or a share sale, and how does property transfer tax apply either way?
• What does our fuel supply agreement say about consent, a right of first refusal and repaying incentives?
• Do we need a site disclosure statement, and what environmental reports should we order before listing?
• How should we split the price between land, buildings, equipment, goodwill and stock?
• Can we use the section 167 election, how will GST/HST on the land be handled, and how does PST apply to the equipment?
• Which permits, authorizations and agreements must the buyer apply for, and how long will each take?
• How are fuel in the tanks, store stock, fleet balances and wash memberships handled at closing?

Rules and rates change, so confirm current requirements with the Province of BC, your local government and fire department, the Canada Revenue Agency and your province's regulators before you set dates. For more, read what your lawyer and accountant do. Selling a store without fuel? See selling a convenience store. Running a repair garage on the same lot? See selling an auto repair shop in Canada. This guide is general information, not legal or tax advice for your situation. Questions about listing with us go to hello@sellmybusinessdirect.com.