In Canada, can buying a business be deducted against personal taxable income as other business related expenses would, if one is running it as a sole proprietorship?
Yes, you will be able to claim it as an expense on your taxes, but not all in the current year. It is split into three categories:
Current Expenses - Assets purchased such as inventory would be able to be claimed in the current year.
Assets - Vehicles, Buildings, and equipment can be depreciated over time based on the value you purchased them for and the CCA class.
Goodwill - In tax terms this is the value of the business purchase that is not eligible in 1 or 2 and is called Eligible Capital Property. This can be expensed over time.
From info at CRA website: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/byng/menu-eng.html