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.
Principal Issues: Whether a child beneficiary of a Trust, who never farmed, could have qualified farm property if a parent, grandparent or great-grandparent met the gross revenue test in clause (a)(vi)(A) and did the farming while they owned the property.
Position: Yes, if the parents or grandparents, including the great-grandparents met the gross revenue test while they owned the property.
Reasons: We have considered these issues before. Refer to E9628495 and E9807845
xxxxxxxxxx John Oulton
1999-000303
September 15, 1999
Dear XXXXXXXXXX:
Re Qualified farm property
This is in response to your letter of July 8, 1999, and is further to our letter of June 10, 1999, concerning the above definition in 110.6(1) of the Income Tax Act (the Act).
You would like some clarification concerning the period of the gross revenue test, for properties that fall within subparagraph (a) (vi) of the definition of "qualified farm property" in subsection 110.6(1) of the Act. You asked whether a particular farm property acquired by a Trust in 1999, and held by it for a 24-month continuous period would qualify, on the basis that the grandparents and great-grandparents to the beneficiaries met the gross revenue test in clause (a)(vi)(A), while they owned and operated the farm on a regular and continuous basis in earlier periods such as the 1950s and 1960s.
In general terms, it is our view that the person meeting the gross revenue test need not be the person who owns the property and may be the parent of a beneficiary. For purposes of the definition of "qualified farm property, " "child" has the meaning assigned by subsection 70(10) of the Act. Accordingly, a grandparent or great-grandparent can be considered a “parent" of an individual because of the extended meaning of "child" in paragraphs 70(10)(a) and (b) of the Act, which applies for purposes of section 110.6. Thus, if the grandparents or great-grandparents met the gross revenue test in at least two years while they owned the property, and they transferred the property to a child, the requirements of clause (a)(iv)(A) of the definition of qualified farm property in the Act may be met, even if the child has not farmed the property.
Yours truly,
John Oulton
For Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
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