19 June 1990 Internal T.I. 900427 F - Livestock Raising and Exhibiting

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.

Attention: 19(1)

June 19, 1990

Dear Sirs:

Re:  Livestock raising and exhibiting

This is in reply to your letter of April 18, 1990 requesting a clarification with respect to what level or degree of 'exhibiting horses' qualifies as farming activity.  In particular you are unclear as to what exhibiting activities of non-race horses are considered farming.  We apologize for the delay in our response.

You also included a definition with respect to this issue that you feel would be clear, concise and fair.  It may read as follows;

     "Exhibiting horses means exhibiting at shows sanctioned by either the Canadian Equestrian Federation (CEF) or a recognized breed association."

Our Comments

Farming as defined in subsection 248(1) of the Income Tax Act, as you point out, includes livestock raising or exhibiting.Livestock is defined in the Oxford English Dictionary to mean "domestic animals generally; animals of any kind kept (exhibited) or dealt in for use or profit". The term "profit" in this context is intended to mean that there must be a reasonable expectation that the keeping or dealing in animals will gain or produce income.

Similarly, Interpretation Bulletin IT-427, to which you refer, makes reference in paragraph 1 to "a taxpayer in the business of farming" and in paragraph 2 to "Livestock...kept...for profit".

Thus the issue is not so much what quantum of exhibiting horses constitutes farming, but "is the individual who is exhibiting horses in the business of farming for a profit?"  Normally, exhibiting horses for ribbons would be viewed simply as a hobby, however, depending on the profit can be reasonably expected on a consistent basis from the raising, exhibiting and selling of owned animals.  Where this is the case the expenses of exhibiting horses will normally be a legitimate farming expense.  We are including a copy of Interpretation Bulletin IT-322R for your information. In it is set out a description of the three classes of taxpayers who farm.

In view of the foregoing we do not comment on your definition as set out above other than to say that we can envision other situations and mediums in which the exhibiting of horses may take place and legitimate farm expense may be incurred.

We trust our comments will prove helpful.

Yours truly,

for DirectorSmall Business and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch

Enclosure