11 August 1995 Internal T.I. 9520827 - WESTERN GRAIN

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.

							August 11, 1995

	Client Assistance Directorate		HEADQUARTERS
	Attn: Louis Lamontagne			A.M. Brake
	Chief, Correspondence Section		(613) 957-8953

							952082

Western Grain Transition Payment Program

This is in reply to your memorandum requesting our assistance with regard to formulating a reply to ministerial correspondence (XXXXXXXXXX landowner) relating to payments under the Western Grain Transition Payments Program.

In relation to the situation at hand, we comment as follows:

In a basic situation the landowner who farms his own land will make application for the payment on the appropriate application forms, following the instructions, provided by Agriculture and Agri-Food Canada. The ACB of the land will be required to be reduced by the amount of the payment received.

In a situation where the land is farmed by a lessee, the applicant landowner must reach an equitable agreement with the lessee with respect to sharing the payment or some other mutual arrangement as a condition of payment. In the absence of such agreement, the onus would be on the lessee to notify the WGTPP Administration before October 15, 1995 that an equitable arrangement had not been reached, in which case there is an arbitration process to decide the issue. Should the Administration not be so notified by the lessee, the payment would be made to the landowner on the premise that an agreement had been reached.

If it is agreed or decided that a portion of the payment is to be given to the lessee by the landowner upon receipt of the payment, that portion will be income to the lessee and, accordingly, will be considered not to have been a transition payment to the landowner.

The agreement could provide that there not be a division of the payment but rather a reduction in the yearly rent or a periodic payment by the landowner to the lessee. Such a payment would be treated on account of income and expense by the lessee and the landowner.

Attached you will find a copy of the appropriate forms and instructions, as provided by Agriculture and Agri-Food Canada, for landowners to make application for such payments.

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch