Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: administrative position in IT-373R for farmers to defer gain on certain minor capital amounts
Position: section 43 applies; administrative position does not apply to taxation years commencing after July 16, 1999
Reasons: interpretation of Act
March 10, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
I am replying to correspondence of December 9, 1999, from your office, regarding the concerns of XXXXXXXXXX, about Interpretation Bulletin IT-3732, Woodlots.
This revised interpretation bulletin was drafted in response to requests that CCRA identifv factors to consider in determining whether a woodlot is operated with a reasonable expectation of profit. The CCRA was also asked to clarify various income tax rules that may apply to transactions in connection with a woodlot, so that interested parties could seek legislative change to obtain the results they consider desirable. The result of this process, which involved numerous consultations with various government departments and non-governmental organizations, was the publication of the bulletin on July 16, 1999.
The former Interpretation Bulletin IT-373R allowed certain farmers to defer capital gains on timber sales, which were considered minor in relation to the income from other farming operations, by reducing the adjusted cost base of their property. This administrative position was intended to apply to sales of timber that involved very small dollar amounts. However, it has become debatable as to what could be minor. Accordingly, and along with our commitment to provide an accurate interpretation of the income tax rules that apply to woodlots, the administrative position was removed from the bulletin effective for taxation years that begin after July 16, 1999.
Since the treatment of income from the sale of standing timber as a reduction of adjusted cost base requires legislative changes, which is the responsibility of the Department of Finance, I have forwarded a copy of your correspondence to the Honourable Paul Martin for his consideration
Yours sincerely,
Martin Cauchon
C.C. The Honourable Paul Martin, P.C., M.P.
Minister of Finance
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