CRA indicates that processing meat can form part of a farming business

Although it stated that the question of whether a processing operation was part of a farming business was a question of fact, CRA indicated that a livestock farmer’s operation of turning his animals into ground or cut meat would be part of his farming business (so that the inventory of such processed meat was eligible for exclusion from his income under the s. 28 cash method of accounting) provided that the processing operation was “incidental to the farming activity” and the income therefrom “not materially significant in relation to the income from farming.” It was assisted in this regard by Tinhorn Creek, where the Tax Court “concluded that winemaking was linked to viticulture and was an integral part of the taxpayer's farming business.”

Neal Armstrong. Summary of 22 September 2016 External T.I. 2015-0594721E5 Tr under s. 28(1)(b).

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