Coop de travailleurs en serres Belle-de-Jour – Court of Quebec finds that greenhouse heating equipment was used in non-farming manufacturing of floral arrangements

The taxpayer used approximately 20% of the area within greenhouses to grow cucumbers or other vegetables, or flowers, from seed for sale as grocery items or as little plants that could be transplanted. The taxpayer also annually produced about 85,000 floral arrangements in pots, which it sold to retailers such as Costco. To this end, it purchased already-grown flowers from other growers, and maintained them in its greenhouses pending its use of them for incorporation into the floral arrangements. Between 2012 and 2014, it constructed a biomass system for heating the greenhouses.

Gibbens JCQ found that this system qualified as a Class 29 property that entitled the taxpayer to investment tax credits, i.e., it was used primarily for the manufacturing or processing of good for sale. Although the ARQ vigorously argued the contrary view, the floral arranging activity clearly was manufacturing or processing. The central issue instead was whether this activity was part of the taxpayer’s (greenhouse) farming business. “Farming” was an excluded activity.

In finding that the floral-arranging activity instead was a separate business, Gibbens JCQ stated:

Nothing otherwise suggests that the two activities were dependent one on the other. In particular, the floral arrangements were manufactured exclusively from already-grown plants that had been purchased by the Coop from third-party suppliers and not from flowers that the Coop had grown for sale as small plants to be transplanted.

Since the biomass heating system was used “primarily” in the qualifying activity, the credit was available.

Neal Armstrong. Summary of Coop de travailleurs en serres Belle-de-Jour v. Agence du revenu du Québec, 2019 QCCQ 6609 under Sched. II, Class 29.