CRA indicates that periods of farming use of a property as a rental property can count towards the principally-used test in s. 73(3)(c)

S. 73(3)(c) specifies that one of the requirements for the rollover in s. 73(3.1) to be available for a parent-to-child transfer of farmland is that

the property has been used principally in a farming … business in which the taxpayer, the taxpayer’s spouse or common-law partner, a child or a parent of the taxpayer, was actively engaged on a regular and continuous basis … .

CRA indicated:

• The “principally” test could be measured by relative years of use, so that the test would be satisfied if over the total relevant period, the active farming use test was satisfied during a majority of the years during that period.
• Years of active use by the taxpayer or one of the listed related persons in the farming business would count for these purposes even if the taxpayer was merely renting rather than owning the property for those years.

CRA appeared to accept that this test was satisfied, for instance, where the taxpayer rented the property for 14 years for active use by him in his farming business, then owned the property for a further 20 years (including 3 years of active use by him in his farming business before then starting to rent out the property for the remaining 16 years) before the mooted rollover to his child: the 17 years of active use in his farming business (including 14 years of use as a rental property) represented a majority of the 33-year period.

Neal Armstrong. Summary of 12 September 2022 External T.I. 2020-0863671E5 under s. 73(3)(c).