Buying a Taxi Business in BC: Licences, the Passenger Transportation Board and the Fleet

What you are buying

A taxi business is a passenger transportation licence with terms and conditions (the number of vehicles, the area of operation, the rates), plus vehicles, dispatch, a brand and drivers. In many BC communities the licence is the scarce asset: the Board controls how many taxis operate in an area, so an established licence in a town with limited competition is what buyers pay for. Everything else can be replaced.

How a licence transfers

Both the seller (transferor) and the buyer (transferee) must apply to the Passenger Transportation Board for approval to transfer the licence. If approved, a new licence is issued to the buyer with the same terms and conditions as the original; a single term or condition cannot be transferred on its own. For a regular transfer the buyer provides a business plan, financial information including cash flow projections and a balance sheet, résumés and criminal record checks for key personnel, and updated rate information. The seller must keep the licence renewed while the application is under review; if it expires, the application is returned.

A share sale of the licence-holding company does not itself require Board approval, but new majority shareholders or directors may be asked to complete the Board's disclosure form. Either way, budget time for the Board's process and make your offer conditional on it.

Other regulators

Taxis in BC also operate under provincial vehicle safety rules, driver licensing requirements including the Class 4 driver's licence, ICBC commercial insurance, municipal chauffeur permits or business licences in some cities, and accessibility requirements where the licence includes wheelchair-accessible vehicles. Check each for the specific operating area.

Ride-hailing and what it did to taxi values

Since the province authorised ride-hailing services, taxi companies in the Lower Mainland and other urban areas have competed with app-based operators for street and app trips while keeping advantages in dispatch contracts, accessible service, airport and hospital work, and communities where ride-hailing has not been authorised or is thin. When you value a taxi business, separate its contract and account revenue from street hails and app trips, and look at the trend in each over the last three years. A company whose revenue rests on contracts and accessible vehicles is more durable than one that depends on downtown street hails.

Vehicles, insurance and drivers

Taxis in BC carry commercial insurance through ICBC with rates that depend on the vehicle class and territory, and vehicles must pass regular commercial inspections. Ask for the fleet list with inspection dates, the insurance renewal cost per vehicle, and the accident history, which affects both premiums and the Board's view of the operator. Drivers may be employees or lease the vehicle from the company; the lease agreements, the split of fares and who pays for fuel and repairs decide the company's actual margin, so read every driver agreement rather than the summary.

Diligence on a taxi company

• Licence: exact terms, fleet size authorised versus actually operated, any conditions or compliance history with the Board.
• Vehicles: age, kilometres, inspection records, whether owned or leased, and the replacement schedule.
• Drivers: employees or independent contractors, and the lease or commission arrangements with them.
• Contracts: hospital, school, corporate and airport accounts, and their terms.
• Dispatch and app: who owns the software and phone numbers.
• Competition: ride-hailing authorisations and other taxi licences in the same area.

Taxes

Vehicles, meters, radios and computers are taxable assets for PST in an asset sale, and you should hold a PST clearance certificate at closing. A share purchase avoids PST on the assets but brings the company's liabilities with it; weigh the two with your accountant.

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Frequently asked questions

Sources

• Passenger Transportation Board: Apply to transfer a licence
• Passenger Transportation Board: Taxi
• Province of BC: Passenger transportation licences

This guide is general information for British Columbia, not legal, tax or financial advice. Rules change; confirm current requirements with the regulator linked above and with your own lawyer and accountant before you buy.