CRA confirms that forest management generally does not generate income from property, but this may not obtain where the only revenue is from stumpage and carbon offset credits

CRA stated that it generally would not consider the principal purpose of a business engaged in forest management activities (e.g., site preparation, planting, thinning and fertilizing) to be earning income from property, so that it would not have a specified investment business even with only one employee. However, it indicated that it was unclear whether this would be the result where the corporation was generating its revenues only from stumpage (i.e., was the stumpage income generated without significant related activity, or was it earned in accordance with the forest management plan, e.g., forest thinning?) and from the sale of carbon offset credits (was it simply refraining from cutting down trees or were there other activities involved, or to which this was incidental?)

CRA confirmed that if the principal purpose of the business was not to derive income from property, the corporation would not be considered to carry on a specified investment business.

Neal Armstrong. Summary of 3 September 2025 External T.I. 2024-1007671E5 under s. 125(7) – specified investment business.