Mr. X engaged in market gardening from 1970 to his death on 1977 on 60% of his land (the balance being a non-commercial woodlot). His widow, who did not continue the farming business, sold a portion of the land previously used for market gardening in 2000 (so that the woodlot now represented more than 50%), and then passed away in 2007 (Scenario 1). Alternatively, Mrs. X did not sell in 2000, and sold the non-commercial woodlot portion (i.e., 40%) in 2007. In 2007, were the conditions of s. 110.6(1.3)(c)(ii) met? The Directorate stated:
[C]adastral lots are considered, for the purposes of the Act, to be separate real property … . Consequently, the determination of the status of the land, i.e., whether or not it can be considered to be property used principally in the business of farming, must be made on a lot-by-lot basis.
Mrs. X's husband satisfied the test for use of the property in the business of farming (i.e., for at least 5 years) as set out in subparagraph 110.6(1.3)(c)(ii) for the market gardening lots. None of the non-commercial woodlots qualified as QFP.
In Scenario 1, at the time of Mrs. X's death in 2007, Mrs. X was deemed to have disposed of the remaining land, which consisted of non-commercial woodlots and market gardening lots. Since, for each market gardening lot, Mrs. X's husband satisfied the test for use in the business of farming in subparagraph 110.6(1.3)(c)(ii) for a period of at least 5 years, the market gardening lots that were deemed to have been disposed of in 2007 were QFP.
In Scenario 2, 40% of the lots were non-commercial woodlots that were not used in the farming business carried on by Mrs. X's husband. Consequently, in our view, those lots did not qualify as QFP.