Principal Issues: [TaxInterpretations translation] Is a taxpayer's income from the taxpayer’s second AgriInvest fund income from property?
Position: Yes.
Reasons: Subsections 12(10.2) and 248(1) "Net Income Stabilization Account [NISA] Fund No. 2".
2010-035949
XXXXXXXXXX G. Goulet CA, M. Fisc
613-957-4364
May 27, 2010
Dear Sir,
Subject: AgriInvest Program
This is in response to your letter of March 2, 2010, asking us to confirm the source from which a taxpayer derives income for a taxation year in respect of a withdrawal of money from the taxpayer’s second AgriInvest Fund. Specifically, you would like us to confirm whether the income is business income or income from property.
You told us that the AgriInvest program was established under the Farm Income Protection Act and is designed to help farmers stabilize their farm income. A particular taxpayer's account consists of two funds. The first represents the taxpayer's contributions, while the second includes the sum of government contributions to the account and interest earned.
Unless otherwise indicated, all legislative references herein are to the provisions of the Income Tax Act (the "Act").
Our Comments
It appears to us that the situation described in your letter may constitute an actual situation involving taxpayers. The Canada Revenue Agency ("CRA") does not generally provide written opinions on proposed transactions otherwise than by way of an advance income tax ruling. Furthermore, it is the responsibility of the relevant Tax Services Office to determine whether completed transactions have received appropriate tax treatment. We can, however, offer the following general comments that may not fully apply in a particular situation.
A farmer's AgriInvest savings account is a net income stabilization account under the Farm Income Protection Act. The second fund is, for the purposes of the Act, a "NISA Fund No. 2 " as defined in subsection 248(1).
Generally, a taxpayer must include in computing income for a taxation year from property by virtue of subsection 12(10.2) the total of all amounts paid to the taxpayer from the taxpayer's NISA Fund No. 2.
Furthermore, for the purposes of section 125, amounts included under subsection 12(10.2) are "income of the corporation for the year from an active business" by virtue of paragraph (b) of the definition of that expression in subsection 125(7).
We hope that our comments are of assistance.
Best regards,
Randy Hewlett
Manager
for the Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.