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.
Dear Sirs:
Re: Advance Income Tax Ruling
This is in reply to your letter dated May 1, 1991, requesting an advance income tax ruling with respect to the tax treatment of amounts received for permitting other persons to remove standing trees from woodlots.
The major issue involved in your ruling request requires a determination that any income earned from the removal of timber by other persons is incidental to any farming income earned at XXX which is a question of fact. Consequently, pursuant to paragraph 14(j) of Information Circular 70-6R2, we are unable to rule on the matter requested in your letter. Your $400 deposit will be returned to you under separate cover.
We do however offer you the following general comments which may help you in resolving your question.
Interpretation Bulletin IT-373R
IT-373R entitled "Farm Woodlots and Tree Farms" provides in paragraph 2(b):
"Where a farm includes a woodlot from which the income is usually minor in relation to the income from other farming operations ... Amounts received (whether in a lump sum or on a stumpage basis) for permitting other persons to remove standing trees from the woodlot are considered to be on account of capital."
If a taxpayer operates or regularly harvests a woodlot, he must include in income amounts received from the sale of trees, lumber, logs, poles, or firewood. However, an amount received from an infrequent transaction allowing other persons to remove timber from a woodlot is considered a capital receipt. There is no time restriction, specified in IT-373R, over which the removal of standing timber, by persons other than the taxpayer, must occur in order for the income derived to be considered capital in nature. Paragraph 3 explains that where income earned from regular cutting is sufficiently large that it cannot be viewed as being incidental to the income from other farming operations it is not considered to be capital. Whether the payments received for the removal of timber from the XXX are incidental to the XXX operation, and therefore would be considered to be capital, is a question of fact.
Our comments are an expression of our opinion only and do not constitute an Advance Income Tax Ruling.
We trust our comments will be of assistance to you.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1991
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1991
Email this Content