Goodwill not transferable separately from business (p.1)
The view of the courts (Herb Payne Transport Ltd. v. MNR, [1963] CTC 116 (Ex. Ct)) is that goodwill is inseparable from the business to which it adds value. Accordingly, the accrued gain on goodwill cannot be realized apart from a disposition of the business.
Knowhow may not be transferable separately from a business (p 1)
A similar issue arises with respect to the transferability of knowhow….The general rule is that knowhow will be considered to have been disposed of only if the transferor can no longer avail itself of the knowledge in question—for example, when it sells the business to which the knowledge relates. An exception may exist if the knowhow is of a type that can be clearly documented and separated from the employees who developed it. Such a situation may account for the CRA's statement that "proceeds from the outright sale of knowledge are considered to be from the disposition of EC property" (Interpretation Bulletin 1T-386R, "Eligible Capital Amounts," paragraph 2(d); archived.
Given a judicial view that goodwill is inseparable from the business to which it adds value, it would appear that the accrued gain on goodwill cannot be realized apart from a disposition of the business.
Knowhow might be considered to have been disposed of only if the transferor can no longer avail itself of the knowledge in question—for example, where it sells the business to which the knowledge relates. An exception may exist if the knowhow is of a type that can be clearly documented and separated from the employees who developed it.
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