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.
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5-900855 |
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R.B. Day |
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(613) 957-2136 |
| 19(1) |
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| We are writing in reply to your letter of May 10, 1990, wherein you requested our views regarding the interpretation of "interest in a family farm partnership" in subsection 110.6(1) of the Income Tax Act, with specific reference to whether or not a farm residence, held by a farm partnership, would be property "used" in the business of farming. |
Our Comments
Paragraph 29 of IT-268R3, entitled "Intergenerational Transfers of Shares of a Small Business Corporation" makes the following general comments regarding assets used in the business of farming by a corporation or partnership:
"29. It is also a question of fact to be determined on an individual basis whether, for purposes of paragraphs 70(l0)(b) and 70(l0)(c), "all or substantially all" of the property of a corporation or partnership is used in the business of farming.
.. Accordingly, it is necessary to establish whether particular assets of a corporation or partnership are used in the business of farming. ... Generally, the Department considers that, ... an asset is used in a farming business if its primary or principal use (i.e. more than 50% of its use) is in respect of the farming business operation as opposed to use in concurrent corporate or partnership operations that may be ancillary or related to the farming operations... In this context a residence owned by a corporation will be regarded as used in the business of farming if more than 50% of its use is as accommodation for persons who are actively employed in the farming business or their dependants.
Similarly, paragraph 5 of IT4-86R states, in part, that:"Generally, the Department considers that an asset is used in a business if its primary or principal use (i.e. more than 5O% of its use) is in respect of that business".
In view of the above, it is our opinion that where it can beestablished that more than 5O% of the use of a farm residence, owned by a farm partnership, is used as accommodation for persons (or their dependants) who are actively employed in the farming business, such residence would be considered to be property used in the business of farming for purposes of the definition of "interest in a family farm partnership" in subsection 110.6(1).
We trust that our comments will be of assistance to you.
Yours truly,for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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