7 October 1991 Income Tax Severed Letter - Qualified Farm Property

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: Qualified Farm Property

This is in reply to your letter dated October 3, 1991 in which you requested our views on the definition of "qualified farm property" in the proposed amendments to subsection 110.6(1) of the Income Tax Act (the "Act") contained in Bill C-18 with respect to the scenario described below. We also acknowledge our telephone conversations in connection herewith XXX Woolley).

Facts

• 1. XXX
• 2. XXX
• 3. XXX
• 4. XXX
• 5. XXX
• 6. XXX

Issue

Does the real property sold by XXX constitute "qualified farm property".

The situation in your letter appears to involve actual contemplated transactions and identifiable taxpayers. Assurance as to the tax consequences of contemplated transactions can only be given in the context of an advance income tax ruling. The procedures for requesting an advance income tax ruling are set out in Information Circular IC 70-6R2, dated September 28, 1990. We can, however, offer the following general comments.

Our Comments

The proposed amendments to the definition of "qualified farm property" and other terms in subsection 110.6(1) of the Act contained in Bill C-18, if enacted, will be applicable to the 1988 and subsequent taxation years. As requested our response will be restricted to an analysis of these amended definitions in subsection 110.6(1) of the Act as they pertain to the scenario described below.

If an individual disposes of real property, where the property was last acquired after June 17, 1987, subparagraph (vi) of the new definition of "qualified farm property" requires, inter alia, the real property (or property for which it was substituted) be owned by:

• (i) the individual,
• (ii) where the individual is a personal trust, a beneficiary of the trust referred to in paragraph 104(21.2)(b) of the Act,
• (iii) a spouse, child or parent of the individual,
• (iv) a personal trust from which the individual acquired the property, or
• (v) a partnership, an interest in which is an interest in a family farm partnership of an individual referred to in (i) to (iii) above

throughout the period of at least 24 months immediately preceding the date of disposition. XXX

These comments represent our general views with respect to the issues raised by you in your letter. The facts of a particular situation may yield a different result. Also, this letter should not be interpreted as confirming, either expressly or implicitly, the income tax consequences with respect to any one or more of the transactions described in paragraphs 1 to 5 above. The foregoing comments are not rulings and, in accordance with the guidelines set out in paragraph 21 of IC 70-6R2 [Information Circular 70-6R2] are not binding on the Department.

We trust our comments are of assistance.