An individual carried on a farming business, but with a full-time job as his main source of income, retires (so that he receives full pension income) but now most of his time is spent operating the farm. Are his losses subject to restriction? CRA stated (TI translation):
As stated in paragraph 3 of… IT-322R…, to determine whether a taxpayer's chief source of income is farming or a combination of farming and some other source that is a subordinate source of income, account must be taken of gross income, net income, capital investment, cash flow, personal involvement and all other factors.
Furthermore, before the introduction of the… legislative changes… applicable to taxation years ending after March 20, 2013…the Craig decision…[indicated] that the factors to be considered in the context of the combination question were the capital invested in the farm and in the second source of income, the income earned from each of the two sources, the time devoted to the two sources of income and the ordinary mode of life of the taxpayer, the taxpayer's farming experience and the taxpayer's intentions and expectations. ….
[T]he comments of the Supreme Court of Canada on the considerations mentioned in previous paragraphs could still be relevant. These comments also are consistent with those in paragraph 3 of… IT-322R.
In the situation presented, all relevant factors should be considered… . To reach a conclusion in this regard in the situation presented, it is not necessarily sufficient to consider only the time devoted to farming.