PRAIRIE PROVINCES TAX CONFERENCE
DRAFT\EBAUCHE
MAY 19 & 20, 1992
QUESTION 18.
Do funds on deposit in NISA Fund No. 1 and NISA Fund No. 2 qualify as assets being used in a farming business for purposes of determining whether a corporation is a family farm corporation? To the best of our knowledge Revenue Canada has not made this determination as of this date. It is causing a number of clients concern as to whether they will lose their status or not.
ANSWER
The draft legislation on the NISA program was issued by the Minister of Finance on December 21, 1991. It proposes a new subsection 110.6(1.1) of the Income Tax Act, which provides that the fair market value of a producer's NISA account is considered to be nil for purposes of determining whether a share satisfies the definitions "qualified small business corporation share" or "share of the capital stock of a family farm corporation". In effect, the value of a NISA held by a corporation will not influence the determination of whether a particular share meets the criteria set out in those definitions.