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 custom grain drying can be considered a "farming" activity?
Position TAKEN:
No
Reasons FOR POSITION TAKEN:
Farming as defined in 248(1) refers to the development of basic food product, the growing process and natural biological changes. The activity must be agricultural in nature to be a farming operation.
5-940616
XXXXXXXXXX M. Shea-DesRosiers
May 31, 1994
Dear Madam/Sir:
Re: Grain drying business - whether farming business
This is in reply to your letter of March 3, 1994 concerning the above-mentioned subject. Unless as otherwise stated all references to statute are to the Income Tax Act S.C.1970-71-72, c.63 as amended consolidated to June 10, 1993 (the "Act").
It is a question of fact whether a particular activity can be considered to be "farming" for purposes of the definition in subsection 248(1) of the Act.
The determination as to whether a taxpayer has a source of income which is farming would depend on the nature and extent of the operation. In the situation you describe the taxpayer earns his income by providing a service to other taxpayers and his income is dependent on the success or failure of the crop the farmers harvest for their animals.
Pursuant to the definition of "farming" at subsection 248(1) of the Act, "farming" includes tillage of the soil, livestock raising or exhibiting, maintaining of horses for racing, raising poultry, fur farming, dairy farming, fruit growing and the keeping of bees.
We are therefore of the opinion that the activity carried out after the crops have been harvested by farmers (not the taxpayer's own crops) and taken to the grain drying facility of the taxpayer would not qualify as a farming activity since it does not meet the above-mentioned requirements. It follows that the custom grain drying business would not, in such a situation, be considered a farming business.
We trust the above comments will be of assistance to you.
Yours truly,
Director
Financial Industries Division
Rulings Directorate
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