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CWELCC guide · autumn 2026
The structure of the deal decides whether CWELCC survives it.
Two sales can look identical to a family — same building, same staff, same children, same name over the door — and land in completely different places. Buy the shares of the company that holds the licence and the regulation says the licensee stays enrolled, keeping the base fee it already had, though the agreement with your service manager still has to survive its own review. Buy the assets and the licence cannot come with them: the purchaser is a new licensee, applies for enrolment in its own right, and takes its base fee from a table of service-area caps rather than from the vendor. Which of those you are in is settled by how the agreement of purchase and sale is written, not by what either side intended.
Why the licence decides everything else
A child care licence is not transferable. That is subsection 20(5) of the Child Care and Early Years Act, 2014, and the Ministry of Education's licensing manual draws the consequence out: the licence is not an asset that can be sold or transferred, and whenever the legal entity running the centre changes, a new licence is required.
Everything else follows from that one rule.
In a share sale, the buyer acquires the corporation. The corporation is the licensee, and it has not changed — it has only changed hands. No new licence is needed, because, as the manual puts it, the legal entity responsible for the operation and management of the centre does not change. The ministry still wants to hear from you: the manual says that regardless, the current licensee must contact their program advisor to let them know what is happening. And once the corporation actually gets a new director or officer, that has to be reported — subsection 20(6) gives 15 calendar days, the Child Care Licensing System profile has to be updated, and the incoming person's required documentation, such as a police record check, goes in with it.
In an asset sale, the buyer acquires only what the agreement lists — equipment, leasehold improvements, goodwill, perhaps an assignment of the lease. A different legal entity will be operating the centre, so that entity has to be licensed in its own right. It must, in the manual's words, initiate the licensing process as if it were an initial applicant, starting by registering with the Child Care Licensing System, and it pays the application fee. A new licence is issued only if approved by the ministry's director, and the manual is candid that there is no guarantee the proposed future licensee will be licensed. The manual adds the step operators forget: the new entity must also apply to its service system manager if it wants to be in CWELCC.
The notice obligation here is not limited to sales. The manual attaches it to any change in the legal entity holding the licence — incorporation and amalgamation as much as a sale of a centre or its assets — and requires the current licensee to notify their program advisor in writing at least 30 days before the tentative closing date. The notification should include, at a minimum, the tentative closing date, the name of the prospective future licensee, and plans to inform parents, staff and the service system manager. Once the current licensee is no longer operating, it returns its licence and decal to the ministry.
One detail is worth knowing before you set a closing date. Where the current licence is expiring soon, the manual suggests applying for a renewal instead to minimise disruption — and in that scenario the program advisor conducts the licensing inspection with both the current and the future licensee present, and the two of them must decide who is responsible for complying with anything outstanding that comes out of it. Better a cost somebody has already agreed to carry than a negotiation a fortnight before closing.
Both routes, whatever the deal looks like
- Contact the ministry program advisor in writing at least 30 days before closing, not after.
- Report any change of directors or officers within 15 calendar days and update the Child Care Licensing System.
- Tell your service manager in writing — 60 days ahead in Peel and in Toronto alike, and in Halton whatever your own agreement requires.
- Do your own due diligence. Toronto states that both seller and purchaser are fully responsible for it, and that the City does not approve or disapprove any aspect of the transaction.
- File the corporate changes under the Business Corporations Act as well.
Two different thresholds
“Substantially all of its assets” is the CWELCC test, in subsection 77.1(7) of O. Reg. 137/15. Licensing uses a wider one: the manual treats a sale of some of the assets to a purchaser that does not acquire the licensed corporation as still needing a new licence. A partial asset sale can therefore require a new licence without being the thing the CWELCC re-application rule is aimed at. If your deal sits near either line, settle the characterisation before the price is agreed.
The two routes side by side
| What it touches | Share sale | Sale of substantially all the assets |
|---|---|---|
| The licence | Unchanged. The corporation is still the licensee, so no new licence is issued. | A new licence is required, because a different legal entity will operate. Issued only if the ministry's director approves, and there is no guarantee. |
| CWELCC enrolment | Continues. Where the shares transferred would be sufficient to let the buyer change the corporation's board, subsection 77.1(6) says the licensee “remains enrolled and subject to the agreement”. | Ends for the vendor. Under subsection 77.1(7) a purchaser that wishes to be in CWELCC must apply for enrolment itself. Toronto puts it plainly: “enrollment in CWELCC is not transferable”. |
| The base fee | Carries on. The cap is keyed to the licensee, and the licensee has not changed, so the December 31, 2024 figure still applies. | Reset. A licensee that was not enrolled on December 31, 2024 is capped at the amount in the regulation's table for its own service area. |
| The service agreement | Not automatic. In Halton it is maintained and assigned where assignment is required, but subject to an eligibility review. In Peel the transfer is approved at the Region's discretion. In Toronto the City approves or denies continuation “in its sole discretion”. | The vendor's agreement ends — in Halton it “will be terminated”, and Peel's handbook says an asset sale terminates the funding agreement too. The purchaser needs its own, which depends on its enrolment application. |
| This year's reconciliation | Stays with the corporation, for the whole calendar year — including the months before closing. The buyer owns that exposure. | Falls to the vendor up to the closing date. In Peel the seller must file its audited statements and reconciliation templates within 30 days of the effective date; in Halton the Region reconciles and recovers repayable funding on termination of the agreement. |
| Staff | No change of employer. Service, wage floors and workforce funding obligations continue without interruption. | New employer. Under the Employment Standards Act, 2000 service is still deemed continuous for the purposes of that Act if the buyer hires them within 13 weeks. |
| The corporation's tax year | Deemed to end immediately before control changes hands, subject to a narrow election. Two T2 returns inside one calendar year. | Unaffected for the buyer's corporation; the vendor's corporation keeps its own year-end and reports the sale in it. |
The base fee cap has three branches, not two
This is the part most often got wrong, including in advice we have been asked to check. Subsection 77.2(2) of O. Reg. 137/15 sets the base fee at the lowest of three amounts:
- $22 per day;
- the base fee charged on December 31, 2024, if the licensee was enrolled in CWELCC on that day; and
- the applicable amount set out in a Table to that section, if the licensee was not enrolled in CWELCC on December 31, 2024.
Paragraph 3 is the branch that matters on a purchase, and it is not a single national figure. The Tables are organised by service area, and the amounts differ. A guide that quotes one region's numbers as though they were the regulation is a guide that is wrong for everyone else — so here are the three service areas we work in, for a licensee enrolling now. Our guide to what you can and cannot charge parents covers the rest of the fee rules.
| Daily cap for a licensee not enrolled on December 31, 2024 | In Peel | In Halton | In Toronto |
|---|---|---|---|
| Centre, full day — infant, toddler, preschool, kindergarten, school age and family age groups | $22.00 for all six | $22.00 for all six | $22.00 for all six |
| Centre, before and after school — kindergarten | $13.35 | $13.26 | $15.26 |
| Centre, before and after school — school age | $12.27 | $12.22 | $12.55 |
| Home child care, full day — younger than 2 / 2 to 3 / 4 to 6 | $22.00 / $22.00 / $19.28 | $22.00 / $22.00 / $22.00 | $22.00 / $22.00 / $17.88 |
| Home child care, before and after school — 4 to 5 / 6 to 12 | $14.88 / $13.81 | $16.00 / $17.24 | $12.99 / $12.82 |
Two riders. Subsection 77.2(3) allows a different base fee where the Minister has authorised the service system manager to enter into an agreement with the licensee permitting it, so the table is not quite the last word. And subsections 77.2(4) to (6) are a trap for a new enrollee: where a higher base fee has been prepaid, the licensee must credit or refund the difference, and for a licensee that was not enrolled on December 31, 2024 the clock is 60 days from the day the service system manager notifies it of its enrolment date. A purchaser that has been collecting its own fees while its enrolment application is considered should know that number before it starts.
Put the table next to the comparison above and the commercial point is clear enough: a share sale carries the vendor's December 31, 2024 fee across, and an asset sale does not. For a centre frozen well below its service area's table amount, those are different numbers. It would still be a mistake to read that as free money, for three reasons.
- The enrolment is not yours to assume. Subsection 77.1(2) says the service system manager shall enrol an applicant unless one of three things is true: there are reasons to believe the centre or agency is not financially viable or will not be operated in a financially viable manner; there is reason to believe the licensee will use the funding for improper purposes; or the operation is inconsistent with the service system manager's directed growth plan. Enrolment is not discretionary, but those three grounds are real, and service managers are required to post their growth plans.
- Base fee revenue is netted off your allocation. Cost-based funding subtracts an expected base fee revenue offset from what the Region pays you, and at reconciliation it uses the greater of what you actually earned and that expected offset. A higher permitted fee is not added to the allocation; it is largely taken back out of it. How cost-based funding works sets out the arithmetic.
- You may lose the history. The rolling top-up carries the previous year's actual eligible costs forward, and the provincial guideline applies that step only to existing centres or agencies that received a top-up in the previous calendar year. Whether a purchaser operating at the same site counts as existing or new is not something the guideline spells out, so it is worth confirming with your service manager rather than assuming.
And in Peel there is a hard ceiling on the upside of buying: a purchaser is not permitted to increase the number of CWELCC spaces beyond what was previously allocated to the seller. An application for more goes through Peel's CWELCC multi-year expansion plan, and a change from not-for-profit to commercial status can only be considered when Peel has expansion spaces available for commercial operators. Buying a centre is not a route around an expansion window.
What your service manager requires
The regulation is the same everywhere. What each service manager asks of you before closing, and what it does while it considers the deal, is not. Peel, Halton and Toronto sit in three different places, and the difference is measured in weeks of notice and, in Toronto, in paused payments.
One warning about where to look. In Peel the change-of-ownership rules are not in the CWELCC funding guideline at all — that document is silent on the subject. They are in Peel's Early Years and Child Care Service Provider Handbook, which is a different PDF, and they are as demanding as Toronto's. An operator who reads only the funding guideline will conclude Peel has no process, and will miss a 60-day notice requirement.
| Service manager | On a share transfer | On a sale of substantially all the assets | Notice and who to tell |
|---|---|---|---|
| In Peel | The new owners assume the licence — including the CWELCC space allocations “at approved operating fees and service levels” — and the funding agreement with the Region, together with “all reporting requirements associated with the corporation and its fiscal year end”. The new owners are responsible for working with the previous ones to get that reporting done. | Peel's handbook is blunter than the regulation: an asset sale, amalgamation or corporation change “will result in the termination of the operating licence from the Ministry of Education (including any CWELCC space allocations), as well as any funding agreement(s) with Peel Region”, and CWELCC spaces “do not transfer automatically to the new owner or entity”. The new entity may apply to enrol to maintain the spaces the previous one held. | At least 60 days before the effective date, or before October 31 of the applicable funding year, whichever is sooner, by email to the Early Years System Division. Failure to comply with the notice period “could result in a delay or hold on payment”. |
| In Halton | The operator “will continue to be enrolled in CWELCC and must maintain the applicable Base Fees”. The agreement is maintained and assigned if assignment is required, and funding continues — but subject to an eligibility review, and if that review finds ineligibility the agreement is terminated. | Where the operator sells substantially all of its assets and the purchaser wishes to enrol, the purchaser “must submit a new application for enrollment and the existing Agreement will be terminated”. Halton reconciles and recovers repayable CWELCC funding on termination. | The notice set out in your own agreement, given before any change of control takes effect. Halton asks operators considering either route to speak to their assigned Quality and Accountability Specialist in advance. |
| In Toronto | A review “to determine if the Service Agreement with the City of Toronto is eligible for transfer and if the transfer will be approved”. Continuation turns on the agreement being in good standing, legal confirmation of the sale, assurance of continued financial viability, the purchaser's child care experience, and complete supporting documentation. Toronto, citing the provincial funding guidelines, notes that a sale of shares “could result in a continuation of CWELCC enrollment”, and the City approves or denies continuation of the agreement “in its sole discretion”. | Addressed directly: “For a sale of assets, the Purchaser would be treated as a new licensee and enrollment in CWELCC is not transferable.” For fee subsidy funding to continue, the General Manager “may grant approval on a case-by-case basis”. | Written notice at least 60 days before the closing of a sale-of-shares transaction, and both seller and purchaser sign a Letter of Acknowledgement, available from your assigned Toronto Children's Services consultant. Closures and relocations, temporary or permanent, go to your district consultant first. |
Two things in Peel's handbook deserve to be read before a price is agreed rather than after. The first is that approval is discretionary: “any change of ownership executions, including the transfer of funding agreement(s), will be approved at our discretion”, and Peel says it will not transfer an existing funding agreement where the purchasing corporation has a different corporation name and number than the one on the executed agreement, or where the operating licence “has been terminated, impacted, or altered”. On an asset sale both of those are usually true by construction, so a buyer should not assume the Peel agreement follows the assets. The second is that service levels — service hours, service days, what is included in the base fee — “must be maintained”, and a reduction “will not be considered”. If the deal only works by trimming hours, the deal does not work.
Read Toronto's two sentences about timing together, because they do not say the same thing. The notice period is 60 days. But Toronto also says it “can take up to three months (or longer) to complete the review and finalize Service Agreement continuity”, and that funding “may be temporarily paused” until the review is done. A centre closing a share sale on the minimum notice can therefore be a month into new ownership with payments on hold and a payroll that still has to be met on wage floors it is required to honour. That is a working-capital question for the purchase agreement, not an administrative footnote.
What a share buyer inherits
Buying the corporation means buying its CWELCC year. Reconciliation runs on the calendar year, January to December, against the licensee — not against whoever happened to own it in a given month. A deal closing in September hands the buyer a reconciliation covering eight months it had nothing to do with.
That matters because the two ways a centre ends up owing money both accumulate quietly through the year. In Peel you may owe a recovery if your actual program costs come in below your program cost allocation, which also triggers a recalculation of the amount in lieu of profit, or if your actual base fee revenue comes in above the expected offset. Neither shows up on a bank statement. Both are settled after year end, by which point the buyer is the one answering for them — and Peel's instruction to the operator is to set the money aside in its bank account to settle the repayable. On a share sale, ask whether that has been done, and consider a holdback if it has not. Our guide to the reconciliation, step by step covers what gets compared.
Three more inherited positions are worth naming, because each has cost someone money:
- One-time emergency funding in Peel comes with a seven-year string, counted from approval. A centre approved for OTEF towards a major capital expense must commit to participating in CWELCC for seven years, and Peel's August 2026 guideline gives its own worked example: OTEF received for a major capital replacement in 2026 means committing to participate until December 31, 2033. Peel's guideline states that early withdrawal, closure or sale of the programme may result in the Region recovering OTEF funding on a prorated basis. If the centre you are buying re-roofed itself with OTEF, find out which year it was approved and for how much, and count seven years from there.
- Funding is reconciled site by site in Peel from 2026. Peel issues and reconciles CWELCC funding by site, multi-site providers cannot move funding between sites, and they must keep CWELCC funding and revenues separate for each site. Buying one site of a group brings none of the group's flexibility with it, and that site's own numbers are the only ones that count.
- Workforce obligations are not negotiable on closing. Wage floors, the wage enhancement grant and workforce compensation funding attach to eligible positions, and Peel requires the enhancements to be paid with each pay cheque or payment made — one-time, year-end payments of wage enhancements are not permitted. A buyer intending to restructure pay is restructuring around a floor.
On an asset sale, employment law pulls the other way from licensing. The licence does not come with the business, but the staff largely do: under section 9 of the Employment Standards Act, 2000, if the purchaser employs an employee of the seller, that employment is deemed not to have been terminated or severed for the purposes of that Act, and employment with the seller is deemed to have been employment with the purchaser for any subsequent calculation of length of employment. The exception is narrow — it does not apply where the purchaser hires the employee more than 13 weeks after the earlier of their last day with the seller and the day of the sale. That deeming sets the statutory minimums, not what a court might find at common law, and for a centre with long-serving registered early childhood educators the accrued notice and severance exposure is a real number that belongs in the price. Accrued vacation pay follows the same line: hire the staff inside the 13 weeks and it comes with them.
Ask for these before you sign
- The last two reconciliation settlements, and any recovery still outstanding.
- The current year's allocation letter and every in-year adjustment.
- The CWELCC service agreement itself, with its notice and assignment clauses.
- The licence, the licensing inspection history and any outstanding requirements.
- The parent handbook, including the fee schedule and the closure day list.
- Any one-time or capital funding approval, its amount and the year it was approved.
- A staff list with hire dates, positions and current hourly rates.
- The December 31, 2024 base fee for every age group, evidenced.
The handbook is evidence
The parent handbook is where the fee schedule and the closure calendar live, and a service manager reads it as the statement of what you charge and when you are open. On a purchase it is the cheapest document to get and one of the most revealing. See closure days and service levels.
The tax year and the CWELCC year stop lining up
This is the part that lands on us, and the part easiest to miss until the returns are due.
A share purchase that gives the buyer control of the corporation is an acquisition of control, which paragraph 251.2(2)(a) of the Income Tax Act makes a loss restriction event. Paragraph 249(4)(a) then deems the corporation's taxation year to end immediately before that moment, with a new taxation year beginning at it — subject to a narrow election in paragraph 249(4)(b) where the year would otherwise have ended in the preceding seven days. So a corporation acquired in September normally files two T2 returns for 2026: one for the stub period to the day before closing, one from closing to its new year-end.
CWELCC does not move with it. The reconciliation is still a single January-to-December exercise, and the standardized financial report the Ministry requires is still built on actual eligible costs incurred and base fee revenue earned across the whole funding year. The figures the service manager asks for therefore have to be assembled across two fiscal periods and reconciled to statements that no longer cover the same twelve months. Where audited statements are required, the independent auditor we work with is looking at fiscal periods while the Region is looking at a calendar year. None of that is difficult if it is planned for. It is genuinely awkward if the first anyone thinks about it is in April.
In Peel there is a further constraint on the buyer's freedom here. Participating in CWELCC in Peel carries a mandatory December 31 year end, with calendar-year audited financial statements and the FAIR, exemptions “granted only in limited circumstances”, and no changing or delaying the alignment without the Region's prior written approval. The deemed year-end that paragraph 249(4)(a) forces is a taxation year, not a change of fiscal year end, so the two can sit side by side — but a buyer who was planning to move the corporation onto a year end of its own choosing should know that in Peel that is not simply its own decision to make.
HST on an asset purchase is usually a cost, not a timing difference
Child care is an exempt supply. The exemption sits in Schedule V, Part IV, section 1 of the Excise Tax Act and turns on the nature of the service rather than on holding a licence: a supply of child care services the primary purpose of which is to provide care and supervision to children 14 years of age or under, for periods normally less than 24 hours a day. A business making only exempt supplies generally cannot register for GST/HST and is generally not entitled to claim input tax credits on property and services bought to make those supplies. That changes the character of HST on a deal: in a taxable business it is a cash-flow item you recover, and for a child care operator it usually is not.
Which makes the section 167 election worth knowing about. On a sale of a business or part of a business, supplier and recipient can jointly elect on form GST44 so that no GST/HST is payable on the supplies made under the agreement. The conditions are specific: the supplier must be selling a business or part of a business it established or carried on, or acquired and carried on; the recipient must acquire ownership, possession or use of all or substantially all — generally 90% or more — of the property necessary to carry the business on; and if the supplier is a registrant, the recipient must be one too. The election also does not reach everything. GST/HST still applies to a taxable supply of a service to be rendered by the supplier, to property supplied by way of lease, licence or similar arrangement, and to a taxable sale of real property where the recipient is not a registrant — which is exactly the position an unregistered operator buying a building is in.
On the vendor's side, the lifetime capital gains exemption is $1,275,000 for 2026, indexed, and it is available on a disposition of qualifying small business corporation shares. It is a shares exemption. Selling the assets out of the corporation does not give the shareholder the benefit of it on the business goodwill, and whether shares qualify depends on tests applied over the period before the sale. That is a conversation to have well before a letter of intent, not during due diligence. We are not lawyers, and the share-or-assets decision is a legal question as much as a tax one — but the licensing and CWELCC consequences in this guide belong in that conversation from the start, because by the time the agreement is drafted they are no longer free to choose.
Dates that shape a deal closing this winter
| Date | What it is | Why it matters to a sale |
|---|---|---|
| October 31, 2026 | In Peel, the outside date for change-of-ownership notice within the applicable funding year — 60 days before the effective date or before October 31, whichever is sooner. | For a change of ownership effective in the rest of 2026, this date is now the binding one, not the 60 days. |
| November 2, 2026 | Toronto's 2027 Operating Information Online Form is due for child care centres. | Whoever holds the licence submits it, and the spaces and annualized service days on it set the 2027 allocation the buyer will live on. Agree who completes it. |
| Around November 2, 2026 | 60 days before January 1, 2027. | The last date to give Toronto Children's Services the required written notice of a share sale closing on New Year's Day. Earlier is better, given the three-month review. |
| November 30, 2026 | Toronto's 2027 Operating Information Online Form is due for home child care agencies. | The same point, four weeks later, for an agency sale. |
| 30 days before closing | The current licensee's written notice to the ministry program advisor, on any change of the legal entity holding the licence. | It should include the tentative closing date and the name of the prospective future licensee, so the buyer has to be identified and committed a month out. |
| Within 15 calendar days | Reporting a new director or officer of the licensee corporation. | Triggered when the board actually changes, which on a share sale is usually at or just after closing. |
| Within 30 days of the effective date | In Peel, on an asset sale: the seller's audited financial statements and reconciliation templates for the period funding was received. | A month after closing the vendor still has a filing to make. Make sure the agreement says who prepares it and who pays for it. |
| 60 days after notification | The deadline to credit or refund prepaid fees above the cap, for a licensee not enrolled on December 31, 2024, running from notification of its enrolment date. | A purchaser-licensee that collected its own fees while its application was considered has two months to settle the difference. |
| December 31, 2026 | The end of the CWELCC funding and reconciliation year. | A closing either side of it decides who answers for the year. Closing on January 1 gives the buyer a clean reconciliation year; closing in November does not. |
| Seven years from OTEF approval | Peel's CWELCC participation commitment for a centre approved for one-time emergency funding towards major capital. Peel's own example: approved in 2026 means committed to December 31, 2033. | A sale before the end of that period may trigger prorated recovery of the funding. Check the approval year and the amount, then count. |
One piece of wider context, because it changes how long a buyer's horizon is. Canada and Ontario agreed a four-year extension of the Canada-Ontario Canada-wide Early Learning and Child Care Agreement on September 29, 2026, running from March 31, 2027 to March 31, 2031, with nearly $12 billion in federal funding for Ontario and a commitment to maintain current fees at $19 a day on average until June 30, 2027. Until that announcement, anyone valuing a CWELCC-enrolled centre was looking at an agreement with barely a year left to run. The operator-level guidelines for 2027 are not all published — Toronto's is out in draft and expressly subject to change, Peel's and Halton's are not out — so the detail will move.
Questions
We are selling the shares of our company. Does the centre stay in CWELCC?
The enrolment does. Subsection 77.1(6) of O. Reg. 137/15 says that where a corporate licensee transfers shares sufficient to allow the person acquiring them to change the corporation's board of directors, the licensee remains enrolled and subject to its agreement with the service system manager. The licence is unaffected too, because the licensee has not changed. The service agreement is a separate question: in Halton continuation is subject to an eligibility review and the agreement is terminated if the review finds ineligibility, in Peel the transfer of the funding agreement is approved at the Region's discretion, and in Toronto the City approves or denies continuation in its sole discretion, with the purchaser's child care experience among the factors. Tell your service manager in writing before closing.
We are buying the assets. Can we keep the seller's low base fee, or charge $22?
Neither, as a rule. You are not continuing the seller's enrolment: a purchaser that wishes to be in CWELCC applies for enrolment itself under subsection 77.1(7), and Toronto states that on a sale of assets the purchaser is treated as a new licensee and enrolment in CWELCC is not transferable. If you are enrolled, your cap is the lowest of $22 a day and the amount in the regulation's table for your own service area — not the seller's December 31, 2024 figure, and not automatically $22. For before and after school care the table amounts differ by region: kindergarten is $13.35 a day in Peel, $13.26 in Halton and $15.26 in Toronto, and school age is $12.27, $12.22 and $12.55 respectively. Home child care has its own two tables again.
Does the child care licence transfer with the business?
No. Subsection 20(5) of the Child Care and Early Years Act, 2014 makes a licence not transferable, and the ministry's licensing manual confirms the licence is not an asset that can be sold or transferred. If the legal entity operating the centre changes, the new entity must start the licensing process as if it were an initial applicant: register with the Child Care Licensing System and pay the application fee. A new licence is issued only if the ministry's director approves, and the manual notes there is no guarantee the proposed future licensee will be licensed. The new entity must also apply to its service system manager if it wants to enrol in CWELCC.
How much notice does our service manager need?
It depends where you are, which is why this cannot be answered generically. In Toronto, written notice at least 60 days before the closing of a sale-of-shares transaction, with a Letter of Acknowledgement signed by both seller and purchaser. In Peel, at least 60 days before the effective date, or before October 31 of the applicable funding year, whichever is sooner, by email to the Early Years System Division — and note that this requirement sits in Peel's Service Provider Handbook rather than in the CWELCC funding guideline, which is why it is easy to miss. Peel warns that failing to meet the notice period could result in a delay or hold on payment. In Halton, the notice set out in your own agreement, given before the change of control takes effect, plus a conversation with your Quality and Accountability Specialist in advance. Separately, the ministry needs 30 days' written notice from the current licensee before any change in the legal entity holding the licence.
Will our funding stop while the sale is reviewed?
It can. Toronto states that funding may be temporarily paused during a sale of shares until its review is complete, and that completing the review and finalising service agreement continuity can take up to three months or longer. Since the notice period is 60 days, a centre giving minimum notice should plan for a period under new ownership with payments on hold while wage floors and payroll still have to be met. In Peel the risk is framed the other way round: miss the 60-day notice and payment may be delayed or held. Treat it as a working-capital item in the purchase agreement either way.
Who answers for the reconciliation of the year the sale closes?
On a share sale, the corporation does — and the buyer now owns the corporation, so the buyer answers for the whole calendar year including the months before closing. Underspending against the program cost allocation, or base fee revenue above the expected offset, in those earlier months can become a recovery payable after closing. Peel tells operators to set that money aside in the bank, so ask whether it has been. On an asset sale the position is cleaner: the vendor's enrolment ends, the vendor files its audited statements and reconciliation templates within 30 days of the effective date in Peel, and in Halton the Region reconciles and recovers repayable CWELCC funding on termination of the agreement. Either way, ask for the last two reconciliation settlements and anything still outstanding before you agree a price.
What happens to our staff?
On a share sale, nothing: the employer is the same corporation. On an asset sale, section 9 of the Employment Standards Act, 2000 provides that if the purchaser employs an employee of the seller, the employment is deemed not to have been terminated or severed for the purposes of that Act, and employment with the seller is deemed to have been employment with the purchaser for any subsequent calculation of length of employment. That continuity does not apply if the purchaser hires the employee more than 13 weeks after the earlier of their last day with the seller and the day of the sale. It sets statutory minimums rather than common-law entitlements, and for long-serving educators the accrued notice, severance and vacation pay exposure can be significant. CWELCC wage floors and the workforce funding obligations apply to the positions regardless of who owns the centre, and in Peel service levels must be maintained — a reduction will not be considered.
Is HST payable when we buy a child care centre?
Not on a share sale, which is a sale of shares rather than of assets. On an asset sale it depends on what is being sold. Child care is an exempt supply under Schedule V, Part IV, section 1 of the Excise Tax Act, so an operator making only exempt supplies generally cannot register for GST/HST and is generally not entitled to input tax credits — meaning HST on an asset purchase tends to be an unrecoverable cost rather than a timing difference. The section 167 election on form GST44 can relieve it where the conditions are met, including that the recipient must be a registrant if the supplier is one, but it does not reach a taxable sale of real property to a non-registrant, property supplied by lease or licence, or services still to be rendered by the vendor. Worth settling before the agreement is signed.
Does a share purchase change our corporate year-end?
It forces a tax year to end. An acquisition of control is a loss restriction event under paragraph 251.2(2)(a) of the Income Tax Act, and paragraph 249(4)(a) deems the corporation's taxation year to end immediately before control is acquired, with a new year beginning at that moment, subject to a narrow election where the year would otherwise have ended within the previous seven days. So a corporation bought mid-year normally files two T2 returns for that calendar year. CWELCC stays on the calendar year, so the reconciliation and the standardized financial report have to be built across two fiscal periods — and in Peel participation carries a mandatory December 31 year end for the financial statements, which cannot be changed without the Region's prior written approval. Plan the stub-period bookkeeping before closing rather than after.
Sources: O. Reg. 137/15 under the Child Care and Early Years Act, 2014 — s. 77.1(1), (2), (5), (6) and (7) on enrolment, share transfers and sales of substantially all assets, and s. 77.2(2) to (6) with Tables 1 to 4 for the base fee caps by service area (both inserted by O. Reg. 488/24, s. 6); Ontario Ministry of Education, Child Care Centre Licensing Manual, Appendix C: Sales of assets / shares of a corporation — subsection 20(5), the licence as a non-asset, the purchaser's application through the Child Care Licensing System, the 30-day written notice and its contents, and the licence-renewal scenario; Child Care Centre Licensing Manual, Part 12: Corporations — the 15 calendar days in subsection 20(6) for a new director or officer; Ontario Ministry of Education, Chapter 2 Division 1: CWELCC Participation Guideline (November 2025) — the share transfer and asset sale rules and the grounds for declining an application; Chapter 2 Division 2: CWELCC Cost-Based Funding Guideline (July 2026) — the expected base fee revenue offset and the rolling top-up step for existing centres and agencies; Region of Peel, 2026 CWELCC funding guideline, centre-based (version 2, August 11, 2026) — sections 3.3, 5, 11.8 and 12.1, site-level reconciliation, when a recovery is owed and setting it aside, payment of wage enhancements, and the seven-year OTEF participation commitment with Peel's 2033 example; Region of Peel, Early Years and Child Care Service Provider Handbook (version 2, August 2026) — change of ownership and the four types of ownership change, the effect on the licence, funding and CWELCC spaces, financial reporting responsibilities, service level expectations, the 60-day or October 31 notice, discretionary approval of agreement transfers, and the December 31 year-end requirement; Halton Region, CWELCC guidelines for child care operators (April 2026) — “Sale or Change in Control of a Child Care Centre or Home Child Care Agency”, and reconciliation and recovery on termination of the agreement; Toronto Children's Services, Contract and Financial Information — sale or transfer of shares, the factors in service agreement continuation, sole discretion, the 60-day notice, the Letter of Acknowledgement, the possible funding pause, the sale-of-assets position and the 2027 Operating Information Online Form dates; Ontario Ministry of Labour, ESA Policy and Interpretation Manual, Part IV: Continuity of employment — section 9, the 13-week rule and accrued vacation pay; Income Tax Act — paragraphs 249(4)(a) and (b) and 251.2(2)(a); CRA, GST/HST Memorandum 14-4: Sale of a Business or Part of a Business — the section 167 election conditions and exclusions; CRA, GST/HST Memorandum 21-1: Child Care Services and CRA, RC4022 — the exemption and exempt suppliers' registration and input tax credit position; Employment and Social Development Canada, September 29, 2026 — the four-year extension. Notice periods, review processes and base fee caps differ by service manager and service area, and the 2027 guidelines are not all published. General information, not advice for your situation.
Buying or selling a centre?
Call 647-870-8498 or email info@ghayurtax.com. We keep the books for licensed centres and home child care agencies in Peel, Halton and Toronto, and on a change of ownership we work through the open reconciliation, the stub-period returns and the figures the service manager will ask for.