Father, a retired person, who acquired woodlands from his father before 1987 gifts the bare ownership of the woodlands to his Child, while retaining the usufruct of the woodlands. The woodlands have already been commercially exploited in the past, but are not currently used in farming, and Child does not have an intention to commercially exploit them. After indicating that the constituting of the usufruct resulted in a disposition of the woodlot by father to a deemed trust described in s. 248(3)(a), and before concluding that “since the woodlands are not operated commercially at the time of disposition, they will qualify as qualified farm property only if the condition in proposed subparagraph 110.6(1.3)(c)(ii) is satisfied,” CRA stated:
[W]here the property was acquired before June 18, 1987, we consider that the property was used in the business of farming in Canada if one of the following two conditions, as set out in subparagraphs s. 110.6(1.3)(c)(i) and 110.6(1.3)(c)(ii), is satisfied:
- in the year of disposition, the property was used principally in the course of carrying on the business of farming in Canada by any taxpayer referred to in proposed subparagraph 110.6(1.3)(c)(i);
- the property was used principally in the course of carrying on the business of farming in Canada for at least five years during which it was owned by any taxpayer referred to in proposed subparagraph 110.6(1.3)(c)(ii).