Mr. A holds all the shares of Corporation A, which carries on a farming business operated by Mr. A (but not as employee). Corporation A holds the residence, which is occupied by Mr. A, his spouse and their children. Is the residence considered to be property that is used principally in the course of an active business (or a farming business) for purposes of the definition of “qualified small business corporation share” (or “share of the capital stock of a family farm or fishing corporation”) in s. 110.6(1)? CRA indicated that the following position in IT-268R4 was also applicable to such definitions as well as to that of an "interest in a family farm or fishing partnership" in s. 70(10).
[A] residence owned by a corporation will be regarded as used principally in the course of carrying on the business of farming if more than 50% of its use is as accommodation for persons who are actively employed in the farming business or their dependants. … Furthermore, the residence must be provided to the persons in their capacity as employees rather than as shareholders and the residence must be part of the business operation in that it provides accommodation for employees whose services may be required at virtually any time by virtue of the nature of the farming operations.