The answer to your question is not a simple one. Firstly I will assume that the business was operated as a sole proprietorship and not as a incorporated entity.

(If Inc. seehttps://turbotax.intuit.ca/tips/do-you-qualify-for-the-capital-gains-deduction-2-6348 ).

The treatment of the proceeds from the sale of a business depends on the allocation of the purchase price in the sales agreement. Such that monies were earmarked for Capital assets (Land, Building or Equipment), for Inventory or Goodwill (client list).

Tax consequence is different for each classification. You need to address any outstanding UCC of capital assets first. Then deal with disposal of Inventory against "On Hand" balances. Goodwill can be subject to Capital Gains (if identified in the purchase).

The complication arises in what is advantageous to a seller may not be advantageous down the road to the buyer.