Principal Issues: Can a particular property, acquired prior to June 18, 1987, which has not previously met the requirements of "qualified farmed property" qualify in the year of disposition if more than 50% of the property is used in the business of farming?
Position: Question of fact, but unlikely based on the limited information provided.
Reasons: "Qualified farm property" within the meaning of subsection 110.6(1) of the Act, is property that has been used in the course of carrying on the business of farming in Canada. Under clause (a)(vii)(A) of the definition, property must have been used by, among others, the taxpayer or a spouse, child or parent of the taxpayer principally in carrying on the business of farming in Canada in the year the property is disposed of, in order to be considered to have been used in the course of carrying on the business of farming. While it is possible that a property acquired prior to June 18, 1987 may be considered "qualified farm property" if more than 50% of the property is used in the business of farming in the year of disposition, a review of all of the facts surrounding a situation would be required to conclusively resolve whether the parcel of land held by the taxpayer meets the requirements of "qualified farm property". Based on the information provided it is unclear whether more than 50% of the property would be used in the business of farming (it is a question of fact whether such a business would be carried on). One should also consider the implication of the subsection 45(1) change-in-use rules.