Farming

Before concluding that the business of breeding parrots to be sold as pets would not be considered farming, CRA stated:

[B]reeding dogs or other types of animals for use/sale as pets does not normally constitute farming. For instance, in Partington v MNR, 91 DTC 347 and Sniderman v. MNR, 89 DTC 232, the Tax Court found in both instances that the business activities relating to the raising and breeding of dogs as pets was not farming.

Before concluding that "the raising or breeding of rodents could be considered 'farming' for purposes of the Act if the primary purpose for such activity is to supply a food source, whether that food source is for animal consumption or human consumption ….[but] the raising or breeding of rodents or other animals to be sold for use as pets would not be considered as farming," CRA noted that

in Sniderman v. MNR, 89 DTC 232, the Tax Court stated that livestock "are domestic animals such as cattle and pigs, bred or kept on a farm for use and commercial profit"

and that it now construes "livestock" more narrowly than as stated in IT-427R.

Legume germination production was added to the activities of an already operating vegetable farm. CRA stated that “the legume germination production can be a farming activity that is integrated into the activities of a vegetable farm.”

In finding that zoo keeping is not farming, CRA stated:

The business of operating a zoo is not, in our view, part of the common, ordinary or generally accepted meaning of farming. To qualify as farming under the Act, it must therefore fall within one of the listed activities in that definition, "livestock raising or exhibiting" being the only potentially relevant one. ...

The GST/HST list [in NM Chapter 4.4] of livestock accords well both with judicial interpretations and common definitions of the word. … Therefore, where a taxpayer raises or exhibits wild or exotic animals such as lions, tigers, apes, or elephants, these types of animals would not, in our view, be considered as livestock… .

Would income received by a farmer for the rental of land to a wind farm developer for the purpose of constructing and operating a wind farm be properly included in farming income. CRA stated that "generating electricity from a 'wind farm' does not meet the definition of "farming" in subsection 248(1)," and went on to note that "whether or not the income from… the other activities can be included in the taxpayer's farming income generally depends on whether the other activities are considered to be incidental to the taxpayer's farming operations, or are, in fact, a separate business."

After stating that "growing fish or shellfish in water is normally farming where those are stocked, raised and harvested in a controlled environment," CRA went on to note that:

activities after the fish have matured such as gutting, cleaning, freezing, packaging and storing— are normally considered processing activities, not farming.

In response to a query on agronomic monitoring, CRA stated:

[T]he definition of "farming" … does not include the situation where an individual is limited to advising and assisting the farming activities in all their farm management aspects and, for so doing, receives fees.

Consequently ... agronomic monitoring is not a farming activity ... .

A taxpayer's legal growing and drying of marijuana likely constituted "farming," based on the breadth of the definition in s. 248(1). CRA stated:

[F]arming generally does not include the processing of harvested agricultural products unless the processing activities are incidental to the main farming activity of growing the products and are necessary to turn the harvested agricultural products into saleable products. The expression "incidental" implies a subordinate relationship or "having a minor role in relation to". Factors to be considered include the quantum of value added by the processing activity, the capital and labour invested in each activity, and the integration of the various activities into one farming business.

For example, the Tax Court has previously found that processing activities, namely, drying tobacco and winemaking, were an integral part of a farming business.

The taxpayer in 2013-0503311E5 carried on a wine-making business that involved both farming activities (i.e., growing grapes) and non-farming activities (i.e., producing wine for sale). Its fermentation tanks and barrels were considered to likely qualify for class 29 purposes as property used primarily in the manufacturing or processing of goods for sale. In clarifying that the exclusion in Reg. 1104(9)(a) of "farming" from "manufacturing or processing" did not apply, CRA stated:

[A] farmer or a farming corporation may carry on activities that, if carried on by another person, would be considered to be processing of farm products rather than farming. Some examples are: aging of cheese, plucking of chickens, cleaning, polishing and treating of beans, or cleaning sorting, grading and spraying of eggs. …[F]arming does not include the manufacturing or processing of agricultural products unless such activities are incidental to the farming activity. …[G]enerally where a farmer or farming corporation separates the activities of farming and the processing of farm products, the CRA will essentially consider the processing activity to be a distinct business from that of farming provided that there is a clear delineation of the income from each business activity, and that the income from the processing business is properly calculated and is not eligible for any of the special sections in the Act dealing with income from a farming business (such as the cash method of computing income in section 28…).

The taxpayer acquired farmland and rented 50% of it to an unrelated farm producer and 50% to a corporation that operated a nursery there and whose shareholders were him, his children and some of his brothers. During that time, the income from the nursery was his principal source of income. Did the farmland qualify as qualified farm property? CRA responded:

Generally, we are of the view that the activities of a nursery can constitute farming if, in fact, it can be shown that those activities involve the cultivation and growth of plants, shrubs or trees and not just buying and selling those products.

Before describing the requirements for a rollover under s. 73(3) (or 70(9), CRA noted the distinction in IT-373R2, para. 14 (approved in Desrosiers Estate) between a woodlot operation that was a farm (entailing “planting, nurturing and harvesting trees pursuant to a forestry management … plan and significant attention … paid to manage the growth, health, quality and composition of the stands”) and a logging operation, and that if the correspondent’s statement that “the land was used principally in a logging business” was correct, then the rollover would not be available.

In finding that the operation of an egg hatchery (in which the taxpayer purchased eggs from various producers and, after an artificial incubation period of 11 days, resold the eggs) constituted farming, so that the operator could use the cash method under s/ 28 if the operation also constituted a business, CRA stated:

[W]here the CRA seeks to determine whether a particular activity constitutes farming, it is necessary to assess the final product marketed by the taxpayer. If the taxpayer markets a product that is the result of natural biological growth and change, the CRA will tend to conclude that the activity in question is farming. …

… Pollon determined that such [hatchery] activity did constitute farming for the purposes of the Act.

On the basis of additional information, the Directorate concluded that foreign woodlots on which employees performed work constituted farms within the meaning of IT-373R2, para. 14, so that there was an "agricultural activity" within the meaning of s. 122.3(1)(b)(i)(B).

A veterinarian practising exclusively with farmers in his region then sells his goodwill, mainly related to the sale of medicine to his farmer clients. In finding that the goodwill was not a qualified farm property, CCRA stated that “’farming’ … does not include the situation where an individual is limited to maintaining and caring for farm animals that the individual does not own and receives a fee for doing so. This is reflected, inter alia, in Juster … .”

The Directorate treated the question of whether felling, bucking and limbing operations constituted an "agricultural activity" for the purposes of s. 122.3(1)(b)(i)(B) as being informed by whether it was “farming,” and in this regard noted the decision in Desrosiers finding that as the main focus of the activities at a woodlot was not lumbering or logging but, rather, the planting, nurturing and harvesting of trees pursuant to a forestry management plan, it constituted farming, and noted the similar approach in IT-497R3.

A limited partnership that was created for the purpose primarily of working land so that it would eventually be certified as an organic farm by a certifying body would not be considered to be engaged in farming given that tillage involves plowing, sowing and raising crops. However, "raising worms may qualify as farming provided that the worms are kept by a taxpayer and are maintained and bred under controlled conditions for profit and provided further that the activities in relation thereto are substantial and extensive."

A taxpayer operating a maple sugar bush has a sugar shack that he and employees use to produce maple syrup and to serve meals, with the latter activity being more important than the maple syrup production. After indicating that the maple syrup production likely was part of the farming business, CCRA indicated that since the meal operation was not of an ancillary nature, it constituted a separate non-farming activity. This indicated that the property was not used principally (more than 50%) in farming, and did not qualify as a “qualified farm property.”

"... 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."

The activity of raising, training and exercising a horse in order that it may compete as a show jumper can be considered as "farming".

The raising of ostriches for breeding purposes or for the production of eggs or food products likely constitutes farming.

Hydroponics can meet the definition of farming.

Activities relating to the raising of fish may be considered "farming" when fish are stocked, raised and harvested in a controlled environment such as a pond owned by the farmer. Whether processing activities are part of the farming business or a separate business is a question of fact.