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.
Please note that the following document, although believed
to be correct at the time of issue, may not represent the
current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
940692
XXXXXXXXXX A.M. Brake
(613) 957-8953
Attention: XXXXXXXXXX
May 12, 1994
Dear Sirs:
Re: Qualified Farm Property, Subsection 110.6(1)
This is in reply to your letter of March 1, 1994 concerning the gross revenue test from a farming business wherein the
gross revenue therefrom must exceed the income from all other sources. Specifically, you asked questions relating
to whether income from all other sources would include taxable capital gains and whether the gross proceeds from
the sale of farm property be included in gross revenue from farming.
Reference to statute provisions such as section, subsection, etc., mentioned herein will in all cases, unless otherwise
stated, relate to the Income Tax Act S.C. 1970-71-72, c.63 as amended, consolidated to June 10, 1993.
Although you have asked for a technical interpretation, the situation presented appears to be an actual fact situation.
Should this situation involve a proposed transaction, you may wish to submit all relevant facts and proposed transactions for a binding advance income tax ruling.
However, should this situation involve actual taxpayers and completed transactions you may wish to submit all relevant
facts and documentation (including company names and identification numbers) to the appropriate District Taxation
Office for their comments. We are, however, prepared to provide some general comments.
For purposes of the gross revenue test in paragraph (vi)(A) of the definition of 'qualified farm property' in subsection
110.6(1), the gross revenue from farming would not include taxable capital gains nor gross proceeds from the sale of farm property. All taxable capital gains would be income from a source to be included in the computation of income from all sources (other than farming) for any particular year. Any capital gains exemption would be a deduction in computing taxable income but would not reduce the amount otherwise required to be included in income. It might be noted that this gross revenue test is on a year by year basis and it need not be two consecutive years which satisfy the gross revenue requirement.
We trust that you will find our comments of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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