Upon the death of their father (Mr. X), Sons A and B received a devise of the farm that he had actively farmed until his death, but which was not farmed by them. Alternatively (in Scenario 2), Son A carried on the farming business for a number of years before Mr. X’s death. In summarizing the conditions under s. 110.6(1.3), CRA stated:
Throughout the period of at least 24 months immediately preceding that time, the property or property for which the property was substituted was owned by the individual, or a spouse, common-law partner, child or parent of the individual.
Second, throughout a period of at least 24 months while the property was owned by one or more of the above persons, the gross revenue of one of those persons from the farming business for the period during which the property was owned by one of those persons exceeded the income of that person from all other sources for that period.
If the conditions listed above are satisfied, we are of the view that Mr. X's sons -- in both Scenarios -- could benefit from the capital gains exemption for qualified farm property.