12 December 1991 Internal T.I. 9133067 F - Family Farm Partnership

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.

Interest in a Family Farm Partnership

We are in receipt of a letter dated November 29, 1991 from (copy enclosed).  As discussed with you during a telephone conversation on December 9, 1991 (Hoogsteen/Woolley) the issue raised in this letter relates to an active file with which you are dealing with.  Accordingly, we have refused to provide with any comments (a copy of our response to him is enclosed).  However, the following comments outline the Department's position with respect to the content of his letter.

Our Comments

The general issue outlined in 19(1)' letter is whether the definition of an "interest in a family farm partnership" in subsection 110.6(1) must relate to an interest in a partnership of related persons or whether two or more unrelated partners could each own an "interest in a family farm partnership" if all other conditions outlined in such definition were also met.

The definition of "interest in a family farm partnership in subsection 110.6(1) of the Act as it currently reads and in the proposed amendments to this definition in Bill C-18 both make reference to several conditions relating to the partnership, the type and use of the property of the partnership and the length of time such property is held, including:

      (i)     "an interest owned by the individual at that time in  partnership" and

     (ii)     "property used by

              (a)  the partnership,

              (b)  the individual,

              (c)  where the individual is a personal trust, a beneficiary of the trust,

              (d)  a spouse, child or parent of a person referred to in paragraph (b) or (c), or

              (e)  a corporation, a share..."

It is our view that the reference in (i) above to " partnership" does not require that the partnership be a partnership of related persons.  The phrase "interest in a family farm partnership" is merely the term being defined.

We do not believe that the words "family farm" in the term being defined modify the words " partnership" as they appear in the definition.  There is no requirement that the partnership be a "family" partnership.  This is clear from both the English and French texts of the legislation. We have confirmed with Current Amendments Division that this is in accordance with the policy intent of the legislation.

Also, it is our view that the word "or" between paragraphs (d) and (e) in (ii) above means that the "used" condition will be met if any one of the persons in the listing uses the property.

Accordingly, if two unrelated individuals are both actively engaged in a farming partnership and all other conditions set out in the definition of an "interest in a family farm partnership" in subsection 110.6(1) of the Act are met then both individuals will own an "interest in a family farm partnership".  Thus, in our opinion, the word "family" in the phrase "interest in a family farm partnership" is somewhat of a misnomer. 

Of course, if one of the individuals is, as a matter of fact, not actively engaged on a regular and continuous basis in the course of carrying on the farming business, nor is the individual's spouse, child or parent actively engaged on a regular and continuous basis in the course of carrying on the farming business, the "actively engaged" test in the post-amble to the provision will not be met and that particular individual will not have an "interest in a family farm partnership".

We trust these comments will be of assistance.

Yours truly,

E.  Wheeler for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental  Affairs Branch