The taxpayers and their father had used 430 acres of a 5,700 acre property in Manitoba for farming for many years before farming ceased in the early 1970s. Commencing in 1995 they entered into two contracts for the sale of all the timber on different sections of the property for a stipulated price plus one-half of the increased revenue realized by the contractor as a result of any increase in the price of lumber.
In finding that s. 12(1)(g) did not apply to receipts received by the taxpayer from the contract notwithstanding that the cutting extended over a period of five years and that there were two separate contracts with the contractor, Miller T.C.J. stated (at p. 769) that:
"The case law appears to have developed with respect to the cutting of timber on farmland to the point that, to fall outside the scope of paragraph 12 (1)(g) requires only that the property be initially acquired for farming, and that the sale of timber is a one time sale of all the timber on the property."