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.
Principal Issues: Whether the general comments concerning the application of the definition of "share of the capital stock of a family farm corporation" in ITA 110.6(1) to Situation 1 described in file #2001-0088115 are still valid today.
Position: Yes
XXXXXXXXXX 2004-006127
S. Parnanzone
February 17, 2004
Dear XXXXXXXXXX:
Re: Share of the Capital Stock of a Family Farm Corporation
We are replying to your correspondence of February 9, 2004 regarding the above-noted subject.
During a recent telephone conversation with Mr. S. Parnanzone of this office, you outlined a situation where a corporation has owned farmland for 33 years. The corporation used the farmland exclusively to carry on the business of farming in Canada in which the owner of the corporation was actively engaged on a regular and continuous basis for 30 years. In the last 3 years immediately preceding the disposition of the shares, the land was rented to an arm's length person for use in a farming business. All or substantially all of the fair market value of the property owned by the corporation has always been attributable to the farmland.
Your concern was whether the shares of the corporation in the above scenario would meet the definition of "share of the capital stock of a family farm corporation" in subsection 110.6(1) of the Income Tax Act, even though the farmland was rented to an arm's length party for the last 3 years prior to the disposition of the shares. You have concluded that the above facts are similar to those described in Situation 1 in our document No. 2001-0088115, dated November 20, 2001 (copy enclosed). Accordingly, you asked us to confirm whether the comments we made in this document regarding the application of the definition of "share of the capital stock of a family farm corporation" in subsection 110.6(1) are still valid today.
The particular circumstances in your letter on which you have asked for our views appear to be a factual situation. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a completed transaction, you should submit all relevant facts and documentation to the appropriate tax services office for their views. However, we are prepared to offer the following general comments, which may be of assistance.
In our view, the general comments regarding the application of the definition of "share of the capital stock of a family farm corporation" in subsection 110.6(1) to the facts described in Situation 1 in document No. 2001-0088115 are still valid today.
Yours truly,
Milled Azzi, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
??
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2004
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2004
Email this Content