Re: Qualified Farm Property
This is in reply to your letter of June 26, 1991 regarding the definition of qualified farm property for purposes of the enhanced capital gains exemption.
In our telephone conversation 19(1) Guglich) of August 12, 1991 you explained that you are concerned that in the definition of qualified farm property in subsection 110.6(1) of the Income Tax Act (the "Act") the requirements in subparagraph (vi) when combined with the words "real property used by" in paragraph (a) would require that the individual taxpayer use the property at the time of sale.
Our Department's position is that the property is not required to be used in the course of carrying on the business of farming at the time of its disposition. Provided that the other conditions of the definition have been satisfied, prior use of the property in the circumstances described in subparagraphs (a) (vi) or (vii) of the Act will suffice. Bill C-18 contains an amendment to paragraph (a) of the definition of "qualified farm property" in subsection 110.6(1) of the Act to clarify this matter.
We trust our comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch