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.
DRAFT
1994 Roundtable - Institute of Chartered Accountants of Alberta
May 12, 1994
Question No. 20
QUALIFIED FARM PROPERTY
Paragraph (vi)(a) of the definition of "qualified farm property" contains a gross revenue test in determining whether a specific property qualifies as a "qualified farm property". Specifically, the gross revenue of the taxpayer from a farming business carried on in Canada must exceed the income of the person from all other sources for those years. Are taxable capital gains on qualified farm property which are triggered in the two years under review included in the income base which must be less than the gross revenue from the farm properties? For example, if a taxpayer transfers some property to a corporation to utilize the capital gains deduction for "qualified farm property", a subsequent disposition of farm property which was not acquired before June 18, 1987 would require gross farming revenue from those remaining properties to exceed income from all other sources (including the taxable capital gain which was sheltered by the capital gains deduction). This seems a very onerous test when triggering of the capital gain does not have any effect on the taxpayer's taxable income.
DEPARTMENT'S POSITION
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 test is on a year by year basis and it need not be two consecutive years which satisfy the gross revenue requirement.
A.M. Brake
April 21, 1994
7-940973
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